B. THE EC GI REGULATION ACCORDS LESS FAVORABLE TREATMENT TO NATIONALS OF ALL NON-EC WTO MEMBERS THAT HAVE NOT ESTABLISHED EC-STYLE INSPECTION STRUCTURES....................... 126
Date: 22 July 2004
Document codes: WT/DS174/R/Add.1
Complainant: U.S.
Respondent: EU
Third parties: Argentina, Australia, Brazil, Canada, China, Taiwan, Colombia, Guatemala, India, Mexico, New Zealand, Turkey
Dispute stage: Panel
Agreements cited: Art. 1.1, 2.1, 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  Intellectual Property (TRIPS)Art. I, III:4  GATT 1994

TABLE OF REPORTS

Short Form Full Citation
Belgian Family Allowances GATT Panel Report, Belgian Family Allowances, BISD 1S/59, adopted
7 November 1953.
Canada – Patent Protection Panel Report, Canada – Term of Patent Protection, , adopted
12 October 2000.
Canada – Dairy Appellate Body Report, Canada – Measures Affecting the Importation of
Milk and the Exportation of Dairy Products, ,
, adopted 27 October 1999.
EEC – Beef GATT Panel Report, European Economic Community – Imports of Beef
from Canada, L/5099-28S/92, adopted 10 March 1981.
Indonesia – Autos Panel Report, Indonesia – Certain Measures Affecting the Automobile
Industry, , , , , adopted
23 July 1998.
Japan – Apples Appellate Body Report, Japan – Measures Affecting the Importation of
Apples, , adopted 10 December 2003.
Korea – Beef Appellate Body Report, Korea – Measures Affecting Imports of Fresh,
Chilled and Frozen Beef , , WT /DS169/AB/R, adopted
10 January 2001.
Turkey - Textiles Panel Report, Turkey – Restrictions on Impor ts of Textile and Clothing
Products, , adopted 19 November 1999.
US – Section 110(5) Panel Report, United States – Section 110(5) of the U.S. Copyright Act,
, adopted 27 July 2000.
US – Section 211 Appellate Body Report, United States – Section 211 Omnibus
Appropriations Act of 1998, , adopted 1 February 2002.
US - Section 301 Panel Report, United States – Sections 301-310 of the Trade Act of 1974,
, adopted 27 January 2000.
US - Shirts and Blouses

Appellate Body Report, United States – Measure Affecting Import of
Woven Wool Shirts and Blouses from India, , adopted
23 May 1997.
US - Superfund GATT Panel Report, United States – Taxes on Petroleum and Certain
Imported Substances, L/6175-34S/136, adopted 17 June 1987.
US – Section 337 GATT Panel Report, United States – Section 337 of the Tariff Act of 1930 ,
BISD 36S/345, adopted 7 November 1989.

I. INTRODUCTION
1. Apparently motivated by a desire to benefit the rural economy in the EC – particularly in "less
favoured or remote" areas
1 – by increasing the income of farmers and retaining the rural population in
these areas, the EC has established what it belie ves to be a powerful system for protecting
geographical indications for agricultural products and foodstuffs produced in the EC. This is a system
of protection that, according to the EC itself, b estows significant competitive and commercial benefits
on those persons and products ab le to qualify for protection: it increases the prices of qualifying
products and increases the income for persons producing and selling those products.

2. Unfortunately, this substantial benefit to the EC rural economy – and the EC's agricultural
products and farmers – comes at the expense of non-EC products and persons, which face substantial
barriers to accessing this system of protection; it also comes at the expense of trademark right-holders,
whose trademark rights, guaranteed under the TR IPS Agreement, are sev erely curtailed.
Consequently, the instrument of this benefit – the EC GI Regulation
2 – is inconsiste nt with a number
of fundamental obligations of the TRIPS Agreement and the GATT 1994 – including obligations with
respect to national treatment, most favored nation treatment ("MFN") and trademark rights, among
others – as set forth in the first written submission of the United States.3

3. At this point in the proceeding, the issues have been somewhat narrowed and sharpened, and
this second submission will reflect that fact. Notabl y, as discussed further be low, the EC has decided
not to defend the GI Regulation's requirements that third countries adopt the EC GI protection system
and offer reciprocal protection to EC agricultural products as a condition to obtaining protection in the
EC for its GIs. Apparently conced ing that any such requirement is contrary to national treatment and
most favored nation ("MFN") obligations, the EC has, instead, denied that these requirements apply to
WTO Members. Consequently, the only real issu e for the Panel to decide is whether these
requirements do apply to WTO Members.

4. Therefore, this submission will first address, in section II below, the fact that these WTO-
inconsistent obligations do apply to WTO Members, and the US concerns – heightened by the EC's
response to the Panel questions – that the European Court of Justice ("ECJ") would, if presented with
this question, so find. This submission will then address, in sections III through VI, the other aspects
of the EC GI Regulation – i.e., those aspects that the EC admits apply to WTO Members – that are
inconsistent with the national treatment and MFN obligations of the EC under the TRIPS Agreement,
the Paris Convention, and the GATT 1994. Section VII will then discuss how, in light of the US
arguments and the EC's responses, the GI Regulation denies trademark owners the rights that they are
required to have under Article 16.1 of the TRIPS Agre ement to prevent all confusing uses of identical
or similar signs. Section VIII will discuss the GI Regulation's failure to make required legal means
available to interested parties to prevent mislead ing uses with respect to geographical indications, as
required by Article 22.2 of the TRIPS Agreemen t. Finally, section IX will discuss the EC GI
Regulation's denial of the enforcement procedures and remedies required by the TRIPS Agreement.

1 EC GI Regulation, second "whereas" clause.
2 i.e., the measure at issue in this dispute: Council Regulation (EEC) No. 2081/92 of July 14, 1992, on
the protection of geographical indications of origin for agricultural products and foodstuffs, as amended, and its
related implementing and enforcement measures. In this submission, as in the first submission, references to
particular provisions of the GI Regulation are references to Regulation 2081/92 itself, as most recently amended,
provided as Exhibit COMP-1-b.
3 Submitted April 23, 2004 ("US First Written Submission").

II. "RECIPROCITY" AND "EQUIVALENCE" REQUIREMENTS OF ARTICLE 12(1)
OF THE EC GI REGULATION
5. In this section the United States discu sses briefly the reciprocity and equivalence
requirements imposed under Article 12(1) of the EC GI Regulation on all third countries whose
nationals hope to gain access to the EC GI registra tion system. As the United States explained in its
first written submission,4 these conditions are inconsistent with the EC's national treatment and MFN
obligations under the TRIPS Agreement, the Pari s Convention, and the GATT 1994. The sections
that follow below will separately discuss the ot her aspects of the EC GI Regulation that are
inconsistent with these obligations. The reason for th is division is that, unlike other aspects of the EC
GI Regulation, the EC does not appear to contest th at the conditions of reciprocity and equivalence in
Article 12(1)of the GI Regulation, if imposed on WT O Members, would be inconsistent with the EC's
national treatment and MFN obligations. Also unlike the other aspects of the GI Regulation that are
inconsistent with the EC's national treatment and MFN obligations, the EC denies that the
Article 12(1) reciprocity and equivalence conditions are applicable to WTO Members. Therefore, the
only open question with respect to these equivalen ce and reciprocity requirements appears to be
whether the EC GI Regulation, in fact, imposes these requirements on WTO Members.
5 While the
United States would be delighted to find that these requirements are not applicable to WTO Members,
we do not see how the EC's claims in this proceeding can be reconciled with the text of the EC
measure nor with the EC's position prior to this proceeding.

6. Regardless of the Panel's findi ngs on this issue, however, it w ould assist in the resolution of
this dispute to review and make separate findings on whether, in addition to the Article 12(1)
reciprocity and equivalence conditions, other aspects of the GI Regulation, detailed further in the
sections that follow, are inconsistent with the national treatment and MFN obligations of the EC under
the TRIPS Agreement, the Paris Convention, and the GATT 1994. Therefore, the United States will
not discuss the substance of the Article 12(1) conditi ons of reciprocity and equivalence further in the
sections that follow, but simply refers back to its first submission and its oral statement at the first
Panel meeting.

7. Before discussing the inconsistency with na tional treatment and MFN obligations of other
aspects of the GI Regulation, however, the Unite d States would like to emphasize that the EC's
answers to the Panel's questions following the firs t meeting make it even more clear that these
conditions of reciprocity and equiva lence are, in fact, imposed on all
 third countries, including WTO
Members.6

4 US First Written Submission, paras. 33-129.
5 The United States has presented substantial information and arguments that the equivalence and
reciprocity conditions that are imposed on all third countr ies seeking to have their GIs registered and protected
in the EC (or whose nationals seek to object to a GI registration) are inconsistent with the national treatment and
MFN obligations of the TRIPS Agreement, the Paris Co nvention, and the GATT 1994. The EC's only response
has been to deny that the EC GI Regulation imposes any such obligation on WTO Members "because WTO
Members have to protect GIs under the TRIPS Agre ement." First Written Submission of the European
Communities, submitted May 25, 2004 ("EC First Written Submission"), para. 116. The EC has presented no
information or arguments to rebut the US argument that such conditions are inconsistent with those Agreements.
To the contrary, the EC argues only that those conditio ns are inapplicable to WTO Members because of the
requirements of the TRIPS Ag reement. The United States recalls that these conditions apply both with respect
to the ability to register and protect GIs, and with resp ect to the ability to object to the registration of GIs,
although the exact text of the GI Regulation is differe nt with respect to registrations, on the one hand, and
objections, on the other. Therefore, separate findings with respect to each may be appropriate.
6 The United States recalls that this reading of the EC GI Regulation is supported by the text of the
Regulation in light of EC law, and was, in fact, the EC's consistent reading of this Regulation, up until its first
written submission in this proceeding. See US First Written Submission, paras. 32-129, US Responses to Panel

8. Notably, in response to the Panel's second qu estion, the EC confirmed that the registration
procedures in Articles 5 and 6 apply only to geogra phical areas in the EC, and that they apply with
respect to geographical areas outside the EC only to the extent that there are "references to specific
sections of Article 5 and 6" in Articles 12a and 12b (concerning registration of and objection to third
country GIs, respectively).
7 The only such reference in Article 12a (third country registration) is to
the ability of legal persons referred to in Article 5(1) and (2) to register a GI "in the case provided for
in Article 12(3)." The only "case" provided for in Article 12(3) is where the Commission determines
affirmatively that the equivalence conditions and guarantees required of third countries under 12(1)
are satisfied. Therefore, either the Commission does make such a determination for WTO Members,
in which case Article 12a applies, or it does not make such a determination, in which case there is no
procedure for registration available for products fro m other WTO Members. Plainly, the absence of
any procedures whatsoever to register and protect GIs located in the territory of WTO Members
provides even a clearer case of less favorable treat ment than imposing conditions of reciprocity and
equivalence. Either way, there is a violation of national treatment and MFN obligations.

9. Further, it is significant that the EC avoided the Panel's question 20 concerning whether the
Article 12(1) conditions, if applied to WTO Memb ers, would be inconsistent with the TRIPS
Agreement or the GATT 1994.
8 If the EC's position is that these conditions are not inconsistent with
these agreements, then it is simply not possible to read the language "without prejudice to
international agreements" as exempting WTO Members from the conditions in Article 12(1). If it is
the EC's position that these conditions are
 inconsistent with the WTO agreements, the EC should say
so.

10. Other aspects of the EC's responses to the Pa nel's questions reinforce the US concerns that,
under the EC GI Regulation, the conditions of equi valence and reciprocity apply to WTO Members,
and that the ECJ would so read the Regulation.

11. First, the EC itself admits that its interpretati on in this dispute lacks legal force. Indeed, the
Commission goes so far as to state that the Commi ssion's "intention is not to create new legal
obligations in public international or in Community law."
9 The significance of its statements,
according to the EC is that they are "public" and "it is not conceivable … that [the Commission]
would, in the interpretation or application of the Regulation, take a different approach to the one it has
set out before the Panel."10

12. But the EC's argument responds to only part of the concern. As the United States has
explained, the Commission's statement does not prevent the Council, the 25 member States or
individuals from contesting the Commission's applica tion of the Regulation, in granting GI status,
before the Community courts under Article 230 of the Treaty.
11 For this reason, it is misleading to
assert that "the individual views of the EC Members [ sic] States are [not] relevant for the
interpretation of Regulation 2081/92." 12 Under Article 230 of the Treaty, each member State has a
right to challenge any legal act of the Commission. This would include the act of registering a GI for
a product originating in a "third country" whic h has not received approval from the Commission
pursuant to Article 12(3) of the Regulation.

Questions, paras. 1-39, US Oral Statement of the United States at the First Substantive Meeting of the Panel
("US Oral Statement"), paras 7-16, and Australia's First Written Submission, Responses to Panel Questions.
7 EC Responses to Panel Questions, para. 9.
8 EC Responses to Panel Questions, para. 49.
9 EC Responses to Panel Questions, para. 30.
10 EC Responses to Panel Questions, para. 31.
11 US Responses to Panel Questions, para. 14.
12 EC Responses to Panel Questions para. 173.

13. The EC refers the Panel to the ECJ judgment in Petrotub for the proposition that the ECJ
"may take account of statements which the Co mmission has made on behalf of the European
Community in the WTO." 13 The Petrotub case is both instructive and worrisome, for two reasons.
First, in that case, which involved the imposition of antidumping duties on imports – a measure that is
subject to the disciplines of the WTO Anti-Dump ing Agreement, the Commission argued that it was
not required under EC antidumping rules to state th e reasons for discarding a particular method of
calculating antidumping duties. 14 In propounding this interpretation of the EC antidumping rules,
however, the Commission was directly contradicting an earlier communication to the WTO Anti-
Dumping Committee, in which it explained to WTO Members that such explanations would be
provided.
15

14. In other words, in the Petrotub case, the Commission took a position before the ECJ that
directly contradicted the Commission's assurances to WTO Members on the interpretation and
application of EC law. Furthe rmore, the Commission and Council opposed efforts by the appellants
to have the ECJ rely on these earlier representations, claiming, inter alia, that they were "irrelevant."
16
This case, therefore, hardly in spires confidence that the Commis sion will consider itself bound to
interpretations presented to WTO Members.

15. Second, although in the Petrotub case, the ECJ held that it could take Commission statements
to WTO Members into account, there are two importan t caveats relevant to this proceeding. First,
nothing obliges the ECJ to take these statements into account. Further, and more important, the
Commissions statements were not afforded any specia l status in EC law. Rather, the ECJ used the
statements only as confirmation of the ECJ's inte rpretation of the EC's basic antidumping duty
regulation.
17

16. In this connection, an important part of th e Commission's argument to the Panel is that the
ECJ will interpret EC law consisten tly with international law and, th erefore, consistently with the
TRIPS Agreement. 18 However, the ECJ provides a "consistent interpretation" of EC law and
international law only if that is possible, according to the terms of the EC law in question. As the ECJ
has stated repeatedly, "Community legislation must, so far as possible, be interpreted in a manner that
is consistent with international law". 19 If a consistent interpretation is not "possible", the ECJ will
apply EC law alone. 20 In that event, the ECJ would disregard any assurances given by the

13 EC Response to Panel Questions, para. 38; Case 76/00 P. Petrotub, judgment of 9 January 2003,
para. 15 (Exhibit EC-17).
14 Petrotub, para. 47.
15 Communication from the EC Commission, dated 15 February 1996, G/ADP/W/301. The
communication was a response to question posed by Hong Kong, China (G/ADP/W/95); Japan (G/ADP/W/88);
Korea (G/ADP/W/132); Singapore (G/ADP/W/145); and, Malaysia (G/ADP/W/107). The thrust of these
questions was an apparent inconsistency between Article 2(11) of the EC basic anti-dumping regulation and
Article 2.4.2 of the Anti-Dumping Agreement on the extent of the requirement to state reasons for the failure to
apply symmetrical methods in calculating dumping margins. Japan expressly asked: "Although no explanation
is required under Article 2.11 of the [EC] Regulation, can the EC guarantee that it will give an explanation for
[using asymmetrical methods that compare] weighted average norm al value with individual export price in
accordance with Article 2.4.2 of the [Anti-Dumping Agreement]?" The EC responded that "any departure from
the [symmetrical] methods will be explained both to the parties concerned and in regulations imposing
anti-dumping measures." (Emphasis added).
16 Petrotub, para. 48.
17 Petrotub, para. 59.
18 E.g., EC Responses to Panel Questions, para. 33.
19 See the passages quoted from the ECJ in the EC Responses to Panel Questions, paras. 35 and 36.
20 See C-149/96, Portuguese Republic v. Coun cil of the European Union , judgment of 23 November
1999, paras. 49 – 52. (Exhibit US-32). See also, footnote 14 of the US Responses to Panel Questions.

Commission to a Panel because these assurances would be inconsistent with a proper interpretation of
EC law.

17. In the Petrotub case, for instance, the ECJ had to d ecide whether a measure imposing an
antidumping duty was required to include a statement of reasons explaining why a particular method
had not been used to calculate a dumping margin. The WTO Anti-Dumping Agreement explicitly
required such an explanation, but the basic EC antidumping regulation did not. However, Article 253
(formerly Article 190) of the EC Treaty requires th at all EC regulations "s hall state the reasons on
which they are based". In these circumstances, the ECJ could provide a mutually consistent
interpretation of Article 253 of the EC Treaty, the EC basic antidumping regulation, and the
Anti-Dumping Agreement. The ECJ held that:

Once Article 2.4.2 [of the Anti-Dumping Agreement] is transposed by the
Community, the specific requirement to state reasons laid down by that provision can
be considered to be subsumed under the ge neral requirement imposed by the Treaty
for acts adopted by the institutions to st ate the reasons on which they are based.
21
(Emphasis added.)
18. Thus, the consistent interpretation of EC a nd WTO law involved no more than the application
of general rules already contained in the EC Treaty.22

19. In the case of Article 12 of the EC GI Regula tion, by contrast, a consistent interpretation of
EC and WTO law can only be achieved by disregar ding the terms of the Regulation and applying a
registration procedure that has no legal basis in eith er EC law or WTO law. In these circumstances, it
does not appear "possible", under EC rules of interpre tation, to arrive at the Commission's reading of
the Regulation on the basis of a mutually consistent construction of EC and WTO law.
23

20. The plain text of Articles 12(3) and 12a(1) of the EC GI Regulation state that the EC is
entitled to register a GI for a product from a third c ountry only if that country has received approval
from the Commission pursuant to Article 12(3). None theless, apparently to comply with the national
treatment obligation in the TRIPS Agreement, the Commission now proposes to disregard this explicit
requirement.

21. But if it does so, there is no registration pro cedure at all in the EC GI Regulation for WTO
Members. And the EC cannot rely on the TRI PS Agreement, based on the "without prejudice to
international agreements" language, because ther e is no registration procedure in the TRIPS
Agreement that the Commission can apply. The onl y option for the Commission is to apply a novel
registration procedure to WTO Members that is not laid down in either international law or
Community law – or indeed anywhere else.

22. It does not appear that there is any support in EC law, including the EC GI Regulation, either
for disregarding the express terms of the Regulati on or for substituting a registration procedure for
WTO Members that has no legal basis. Therefore, it would not appear "possible" for the ECJ to give
effect to the Commission's non-binding assurances concerning the EC GI Regulation.

21 Petrotub, para. 58.
22 The Hermes case relied upon by the EC in paragraph 35 of its responses to Panel questions, if
anything, reinforces this position, since it emphasized that, in some circ umstances, EC member State national
rules should be applied "as far as possible" in light of the TRIPS Agreement. In addition, however, that case did
not involve Community legislation.
23 See, further, US Responses to Panel Questions, paras. 26–32.

23. In sum, in the absence of convincing legal au thority to the contrary, the United States submits
that this Panel should find that the Article 12(1) c onditions of reciprocity and equivalence apply to all
third countries, including WTO Members, and that th ese conditions are inconsistent with the national
treatment and MFN obligations of the TRIPS Agreement, the Paris Convention, and the GATT 1994.

III. THE EC GI REGULATION IS IN CONSISTENT WITH THE NATIONAL
TREATMENT OBLIGATIONS OF THE TRIPS AGREEMENT AND THE PARIS
CONVENTION
24. Apart from denying that the Article 12(1) cond itions of reciprocity and equivalence apply to
WTO Members, discussed immediately above, the EC has several specific responses to the US
arguments that the EC GI Regulation provides less favorable treatment to non-EC nationals than it
does to EC nationals with regard to the protection of intellectual property rights. Each section below
identifies a US argument with respect to the national treatment obligations of the TRIPS Agreement
and the Paris Convention, and then specifically re sponds to the EC position with respect to that
argument.

A. T
HE EC GI REGULATION DISCRIMINATES BASED ON NATIONALITY
25. The EC admits that there are separate registration procedures – i.e., two different "tracks" –
under the GI Regulation for producers and processors producing or obtaining products in the EC, on
the one hand ( i.e., Articles 5 and 6 of the GI Regulation) and producers and processors producing or
obtaining products outside the EC, on the other ( i.e., Articles 12 and 12a of the GI Regulation). 24
(Similarly, there are two tracks for objecting to re gistrations, depending on whether the objector is a
"natural or legal person ... from a WTO Member or a third country recognized under the procedure
provided for in Article 12(3)" (Article 12d), or wh ether, by contrast, the objector resides or is
established in an EC member State.) The EC ar gues, however, that these two different tracks are
based on the location of the GI, and not the nationality of the GI rightholder. 25 According to the EC,
this distinction concerns the origin of the product but "has nothing to do with the nationality of the
producer"26 so the GI Regulation does not discriminat e between EC and non-EC nationals, and is
therefore not inconsistent with the national treat ment obligations of the TRIPS Agreement and the
Paris Convention.

26. As the various submissions of the complainants and all of the third parties suggest, there are
many reasons that the EC's facile distinction be tween "national" and "lo cation" does not withstand
scrutiny. In the case of geographical indications, it is simply not possible or realistic to ignore the
close relationship between the geographical area that gives rise to the GI right and the nationality of
the rightholder. It is clear from the design, structur e and architecture of the GI Regulation that the EC
provides less favorable treatment to nationals of non-EC Members than to EC nationals.

27. First, under both the TRIPS Agreement and the Paris Convention there is a connection
between where a person is domiciled or established and its nationality.
27 Article 1.3, footnote 1,
states, for instance that, for purposes of the TRIP S Agreement, "nationals" of a separate customs
territory Member of the WTO means "persons, natura l or legal, who are domic iled or who have a real
and effective industrial or commercial establishment in that customs territory." It would appear, then,

24 See, e.g., EC First Written Submission, paras. 56-78 (Sections headed "D. The registration of
geographical indications relating to an area located in the EC; E. The registration of geographical indications
relating to an area located outside the EC; F. Objections from persons resident or established in the EC; and G.
Objections from persons resident or established outside the EC.")
25 E.g., EC First Written Submission, para. 125.
26 EC Oral Statement, para. 47.
27 See US Response to Panel Questions, para. 49.

that this provision would apply to the EC, among ot her WTO Members. As applied to the EC, for
instance, this would mean that the EC's obligatio n under Article 3.1 of the TRIPS Agreement is to
accord to nationals of other Members treatment no less favorable than it accords to persons who are
domiciled or who have a real and effective industrial or commercial establishment in the EC. An
initial question, therefore, is whether, in the GI Regulation, a distincti on is being made between
persons that have a real and effective industrial or commercial establishment in the EC (or who are
domiciled there), and persons who do not – e.g., persons whose commercial establishment or domicile
is in another WTO Member. If so, the EC GI Re gulation is, in fact, making a distinction between
nationals of the EC, on the one hand, and nationals of other WTO Members, on the other.

28. As mentioned above, the EC admits that there are two different tracks under the GI
Regulation for producers and processors producing or obtaining products in the EC, on the one hand,
and producers and processors producing or obtaining products outside the EC, on the other. Given
that, to qualify for GI registration, a product must satisfy strict requirements linking quality,
reputation, or other characteristics of the product to the geographic area, any producer or processor
producing or obtaining such a product in the EC woul d, under any reasonable definition, have to have
a "real and effective commercial establishment" in the EC.

29. Thus, the distinct "tracks" for GI registra tion provided in the GI Regulation do, in fact,
provide for different treatment for EC nationals compared to non-EC nationals. The only way for a
person who is a non-EC national by virtue of a real and effective commercial establishment in another
WTO Member to register for a GI under Articles 5 and 6 of the GI Regulation – the domestic track –
is for that person to establish a real and effectiv e industrial or commercial establishment that produces
or obtains products in a geographic area in the EC , In other words, the only way for a non-EC
national to receive treatment no less favorable than EC nationals is, in effect, to become an EC
national within the meaning of the TRIPS Agreement.

30. Therefore, it appears that, by definition, th e only persons who can apply for GI registration
under Articles 5 and 6 of the GI Regulation – the domestic track – are EC nationals, and that the
solution for any non-EC national who wishes to take a dvantage of the domestic track is, in effect, to
become an EC national. Plainly, the two separate tracks for registering GIs in the GI Regulation are
directly linked to the nationality of the person seeking the registrati on and GI protection afforded by
that registration.

31. The national treatment problem is equally appa rent when viewed from the point of view of
nationals of non-EC WTO Members. Such person s may well be nationals of those non-EC WTO
Members purely because of their commercial estab lishment there, producing agricultural products.
28
Such persons – who are nationals of a non-EC WTO Member by virtue of their establishment in that
Member producing agricultural products – are obvi ously relegated to the "foreign" track of GI
Registration by virtue of that nationality.

32. In addition, any legal person producing or obtaining agricultu ral products and foodstuffs in a
country will, as a practical and perhaps legal matter, become a juridical person of that country. Any
such legal person established in a non-EC WT O Member producing agricultural products and
foodstuffs in that Member is also relegated to th e "foreign track" for GI registrations. And he is
relegated to that foreign track because of where he has set up a legal status to enable him to produce
such products, and therefore due to his status as a national of a non-EC WTO Member. Plainly, in
this sense, the EC GI Regulation di scriminates according to whether a producer of a GI product is an
EC national or not.

28 For example, at least in cases covered by Article 1.3, fn 1.

33. Second, Article 1.3 of the TRIPS Agreement provides that "the nationals of other Members
shall be understood as those natural or legal persons that would meet the criteria for eligibility for
protection provided in the Paris Convention (1967 )." As the US discussed in its first written
submission, in the context of protection against fa lse indications of source, Article 10 of the Paris
Convention provides that "an interested party" in cludes any producer engaged in production of goods
that is established in the locality falsely indicated as the source of goods. This underscores the strong
linkage between the persons claiming protection and the territories in which the geographical
indications are established.

34. Moreover, Paris Convention Article 3 provides th at nationals outside the Paris Union shall be
treated as nationals of countries of the Union if th ey "are domiciled or who have real and effective
industrial or commercial establishments in the terr itory of one of the countries of the Union."
Therefore, even a non-WTO Member national who h as a real and effective industrial or commercial
establishment in a WTO Member must be treated as national of that WTO Member, and provided no
less favorable treatment than EC nationals. The EC GI Regulation also creates a separate track for GI
registrations for any such person with a real and effective industrial or commercial establishment
producing GI products in a non-EC WTO Member.

35. In all of these respects, the EC GI Regulati on creates separate tracks for the registration and
protection of GIs that is intimately intertwine d with the nationality of the person seeking the
protection.

36. Finally, it is obvious that any regulation that provides for separate tracks for registering and
protecting GIs that refer to regions outside the EC, on the one hand, and those that refer to regions in
the EC, on the other, is creating distinct tracks for non-EC nationals and EC nationals. This is
particularly true in the agricultural sector, wher e nationals involved in agricultural production –
particularly of products that have developed over many gene rations a special reputation and
characteristics linked to the region – overwhelmingly ha ve an interest in GIs in the country of their
nationality.
29 A significant part of the value of a GI is its strong link to the region and history of the
producers in that region: the attraction of French GI CHAOURCE for cheese, for instance, is that it
takes its name from the market town of Chaource a nd is allegedly the most famous artisanal cheese
from the Champagne region of France. It has been produced by local farmer s since the 14th century,
who still use traditional techniques today. Similar c onsiderations would apply to for products in the
United States or elsewhere. As the EC itself has noted, "geographical indications are the common
patrimony of all the producers of a certain area, and ultimately of the entire population of that area."
30
Similarly, EC Trade Commissioner Lamy, in a speech last year, described the benefits of geographical
indication protection as follows:

the geographical indication is a kind of collective "mark" of the farmers and
craftsmen of a region. It guarantees that the use of a name will remain attached to a
region and to the community that saw its birth.
31
Similarly, as mentioned before, the preamble to th e EC GI Regulation cites the "considerable" benefit
to the rural economy by "improving the incomes of farmers and by retaining the rural population in
these areas."

29 See, e.g., US Response to Panel Questions, para. 57, and Exhibit US-43, indicating that nationals
generally have an interest in GIs referring to the territories of their nationality.
30 First Written Submission of the EC, paragraph 307, 4th bullet point.
31 SPEECH/03/292 Pascal Lamy EU Trade Commissioner Creation of the Organisation Geographical
Indications Network (ORIGIN) Brussels, June 11, 2003 (emphasis added). Exhibit US-49.

37. In this light, claiming that distinctions based on location of the geographical region in
question has no relation to the nationality of the pe rson producing the product, in the context of
geographical indications, simply fails to recognize the reality of geographical indications.

38. The United States recalls that the US – Section 337 panel specifically considered and rejected
an argument that is similar to that presented by the EC in this dispute. In that dispute, the panel was
reviewing whether the section 337 "procedures" for de termining patent infringement with respect to
imported products fell within the scope of Article III:4 of the GATT, i.e., laws, regulations and
requirements affecting the internal sale of imported products.
32 The panel considered whether these
procedures, which applied to "persons", not to "goods", nevertheless fell within the scope of the
Article III:4 prohibitions on discrimination against imported goods. Interestingly, the EC itself argued
in that case that "[t]here was no justification in the wording of Article III:4 for exempting from its
application the rules of procedures of tribunals. Any such interpretation would enable contracting
parties to take away, by openly discriminatory pr ocedural rules applied to imports, almost all the
benefits conferred by GATT."33 The panel agreed, reasoning that:

Nor could the applicability of Article III:4 be denied on the ground that most of the
procedures in the case before the Panel are applied to persons ra ther than products,
since the factor determining whether pers ons might be susceptible to Section 337
proceedings or federal district court pr ocedures is the source of the challenged
products, that is whether they are of United States origin or imported.34
39. Of course, this dispute, unlike US – Section 337 , includes claims of discrimination as to
nationals under the TRIPS Agreement as well as cl aims of discrimination as to goods under the
GATT 1994. But nothing in US – Section 337 would suggest that the GI Regulation should not be
found to be inconsistent with both sets of obligat ions. Indeed, in that case, even though GATT
Article III:4 addresses discriminatory treatment of products, the Section 337 panel stated that "most of
the procedures ... are applied to persons rather than to products", acknowledging that those procedures
involving goods directly concerned, for the most part, persons.

40. One should also consider, as apparently did the panel in United States – Section 337 , the
consequences of finding that a regulation that does not literally and specifically discriminate purely
according to nationality does not violate the nationa l treatment obligations of the TRIPS Agreement
and the Paris Convention. A WTO Member could di scriminate against certain patent applications,
based on where the application was first filed – for in stance, subjecting all patents first filed abroad to
higher fees. One should therefore beware of the EC's narrow interpretation of the national treatment
obligation under the TRIPS Agreement and the Pari s Convention, which could have the effect of
rendering of little value an obligation that the Appe llate Body has called "a fundamental principle of
the world trading system"
35

41. The EC has suggested in its responses to th e Panel's questions that somehow the fact that
there is a national treatment obligation under GATT 1994 with respect to goods means that the
national treatment obligation under the TRIPS Agreement should be more narrowly interpreted than it
would be in the absence of such an obligation.
36 For instance, the EC cautions against "systematic
overlap."37 Similarly, the EC implies that, since the GI Regulation does not literally and specifically
provide for different treatment according to the "nationality" of the rightholder, the Panel should focus

32 US – Section 337, para. 5.10.
33 US – Section 337, para. 3.10.
34 US – Section 337, para. 5.10.
35 Appellate Body Report, US – Section 211, para. 233.
36 EC Responses to Panel Questions, paras. 72-74.
37 EC Responses to Panel Questions, para. 73.

on whether the formulation actually used in the GI Regulation was an attempt to "circumvent" the
national treatment obligation. 38 Specifically, the EC contends that, because Article III of the GATT
1994 covers discrimination based on a product's origin, there is no issue of "circumvention" in this
case, implying that this means that only a literal, express discrimination against other WTO nationals
would violate the national treatment obligati ons under the TRIPS Agreement and the Paris
Convention. These arguments are wrong.

42. First, the obligations under Article III:4 of the GATT 1994 are separate from those of
Article 3.1 of the TRIPS Agreement and Article 2 of the Paris Convention, and the EC has an
obligation to satisfy both sets of obligations. If there is a violation of national treatment under
Article III:4 of the GATT 1994 – and the United States contends that there is – this does not mean that
there is not also a violation of the national treat ment obligations under the TRIPS Agreement and the
Paris Convention. Indeed, in this case, there is a violation of both obligations . Further, the existence
of an obligation under Article III: 4 of the GATT 1994 does not automati cally mean that the scope of
the obligation under the TRIPS Agreement is narrowe r than it otherwise would be, and the EC has
offered no basis for such a position. Finally, while attempts to "circumvent" the national treatment
obligation may be relevant to whether a provision is in consistent with that obligation, the issue in this
dispute is not "circumvention", but rather, regardless of whether or not the GI Regulation literally uses
the term "national", whether the GI Regulation accord s less favorable treatment to non-EC nationals.
In short, there is no basis for adopting a narrow in terpretation of this funda mental TRIPS Agreement
obligation.

43. The EC also states in its first written submission that the panel in Indonesia – Autos
"cautioned against reading Article 3.1 TRIPS so as to apply to matters not directly related to the equal
treatment of nationals."
39 But in that dispute, the panel was considering whether any measures of
support not related to intellectual property – such as s ubsidies or customs tariffs – might give rise to a
de facto violation of Article 3.1 of the TRIPS Agreemen t. This dispute, by contrast, concerns an
intellectual property measure that does not provide the same access to the protection of intellectual
property rights to non-EC nationals as it does to EC nationals. The issues in these two disputes are
not at all comparable.

44. The EC GI Regulation makes a similar dis tinction between those who can object to the
registration of a GI: Article 7(3) explicitly pr ovides one track for persons who reside or are
established in an EC member States; Article 12d exp licitly provides another track for natural or legal
persons of a WTO Member, whose obj ections are send to the country in which they reside or are
established. Just as in the case of registrations, these two tracks – domestic and foreign – distinguish
between nationals of the EC, on the one hand, and nationals of non-EC WTO Members, on the other.

45. In sum, despite the EC's overly narrow and b aseless interpretation of one of the most basic
and fundamental obligations in the TRIPS Agr eement, the Panel should find that the EC GI
Regulation provides for different treatment for EC nationals, on the one ha nd, and non-EC nationals,
on the other.

38 EC Responses to Panel Questions, para. 73.

B. T
HE EC GI REGULATION ACCORDS LESS FAVORABLE TREATMENT TO NATIONALS OF ALL
NON-EC WTO MEMBERS THAT HAVE NOT ESTABLISHED EC-STYLE INSPECTION STRUCTURES
1. Requiring that WTO Member nationals demonstrate the existence of inspection
structures that their governments have not established accords less favorable treatment
to those nationals than to EC nationals
46. Under Articles 10 and 12a(2)(b) of the GI Regulation a WTO Member must establish specific
inspection structures in its territory in order for its nationals to register and protect their GIs under the
GI Regulation. The EC argues that the requirement for specific inspection structures in the country in
which the GI is located is "equal" not "less favor able" treatment, because the EC also requires its
member States to have those same inspection structures. 40 To paraphrase the panel report in US –
Section 337, where there are differences in the legal pr ovisions applying to non-EC nationals, on the
one hand, and EC nationals, on the other, "given th at the underlying objective is to guarantee equality
of treatment, it is incumbent on the contracting party applying differential treatment to show that, in
spite of such differences, the no less favourable treatment standard" is met.41

47. The EC has not shown that this standard is me t. To the contrary, the requirement for specific
inspection structures does not amount to "equal treatment" of non-EC nationals, because nothing in
the TRIPS Agreement or elsewhere requires WT O Members to establish the specific inspection
structures required by the EC. And, indeed, as discussed further below, many WTO Members,
because of the way they choose under the TRIPS Agre ement to protect geographical indications, have
no such inspection structures. EC member Stat es, by contrast, are required under the EC GI
Regulation to establish such structures.
42 Therefore, while EC nationals are all in a position to satisfy
the "inspection structure" condition of the GI Regul ation and can therefore register and protect their
GIs, non-EC nationals cannot satisfy this condition – at least where the WTO Member concerned has
not established the EC inspection structures – and are precluded from registering and protecting their
GIs.

48. Therefore, requiring that a non-EC national demonstrate that his government has established
the same specific inspection structures as EC member States provides less favorable treatment to that
non-EC national than is provided to EC nationals. Simply stated, the national from a WTO Member
that has not established such inspection structures is precluded from registering his GI in the EC. The
United States submitted substantial information and arguments in its first written submission showing
that a WTO Member cannot, consistent with the TRIPS Agreement and the Paris Convention, require
that another WTO Member establish an equivalent system of GI protection as a precondition to
granting GI protection to nationals of that WTO Member. The EC responded that WTO Members do
not have to satisfy that condition, apparently because such a condition would be contrary to the TRIPS
Agreement. But the requirement for specific inspec tion structures is merely equivalence by another
name, and therefore also inconsistent with the TRIPS Agreement and the Paris Convention.

2. The EC inspection structure requirement s are highly prescriptive, and go beyond
simply assuring that the GI products meet the specifications
49. During the first Panel meeting, the EC sugg ested that the requirem ents for the inspection
structures under Articles 10 and 12a of the EC GI Regulation were not unduly prescriptive, and the
EC complained several times that complainants had not specified which particular aspects of the

40 E.g., EC First Written Submission, para. 121.
41 United States – Section 337 , para 5.11 (emphasis added). That panel report was discussing the no
less favorable treatment standard of Article III of the GATT, but the same principle would apply to the no less
favorable standard of the TRIPS Agreement.
42 Article 10 of the EC GI Regulation.

inspection structures were objectionable. The per tinent issue, however, is not which aspects of the
EC-mandated inspection systems are objectionable, but rather whether the EC can, consistent with the
TRIPS Agreement, demand of WTO Members the establishment of the same particular inspection
structures that the EC has chosen for itself as a precondition for granting TRIPS rights to that
Member's nationals.
43 It cannot, because to do so is to accord less favorable treatment to nationals of
WTO Members who have the right to choose the appropriate method of implementing its TRIPS
obligations, and have not chosen such particular inspection systems to implement their obligations
with respect to GIs.

50. The United States does not disagree that the EC can require, as a condition of registration,
that a GI applicant assure that he is in a position to control the use of the GI, ensuring that products
bearing the GI are entitled to it. Many countries require such assurances. If, once registered, the
owner of the collective or certification mark is una ble to control the use of the mark, the mark is
subject to cancellation.
44 Similarly, as WIPO has noted, some WTO Members protect geographical
indications through collective marks, in which a gr oup of producers, for instance, in a particular
geographical area, jointly own the mark and are entitled to use it. 45 Indeed, the EC has itself likened
GI protection to protection offered by collective marks. 46 The requirements for registering a
collective mark commonly include submitting the name s of the persons entitled to use the mark, the
conditions for membership in the organization, and the conditions for using the mark.47

51. These requirements for registering certifica tion marks and collective marks appropriately
reflect that intellectual property rights are private rights
48 and that the owner of those rights are in the
best position to ensure that the marks are used in a manner consistent with their specifications. More
important, these are requirements that the person seek ing protection is in a position to satisfy, unlike
the EC GI Regulation's requirement that the government, not the person seeking protection, establish
and be responsible for particular inspection structures. Such requirements that are within the power of
the rightholder himself to satisfy do not present the same problems as requirements imposed, not on
the rightholder, but on his government.

43 The United States wonders if the EC would take the same position with respect to other intellectual
property rights. For example, would the EC agree that a Member could require the EC to adopt specific
inspection or other controls procedures before the Member would protect a trademark, copyright, or patent of an
EC national?
44 E.g., UK Trade Marks Act of 1994, Schedule 2, Article 6 reads: "(1) An applicant for registration of
a certification mark must file with the registrar regula tions governing the use of the mark. (2) The regulations
must indicate who is authorised to use the mark, th e characteristics to be certif ied by the mark, how the
certifying body is to test those characteristics and to supervise the use of the mark, the fees (if any) to be paid in
connection with the operation of the mark and the procedures for resolving disputes. Further requirements with
which they regulations have to comply may be imposed by rules." Exhibit US-50.
45 WIPO Document SCT/8/4 (Exhibit US-5) and WIPO Document SCT/9/4 (Exhibit COMP-16).
46 "The geographical indication is a kind of collective 'mark' of the farmers and craftsmen of a region."
SPEECH/03/292 Pascal Lamy EU Trade Commissioner Creation of the Organisation Geographical Indications
Network (ORIGIN) Brussels, June 11, 2003. Exhibit US-49.
47 E.g., EC Regulation 40/94, Article 64(2) "In derogation from Article 7(1)(c), signs or indications
which may serve, in trade, to designate the geographical origin of the goods or services may constitute
Community collective marks within the meaning of paragraph 1." OHIM Examination Guidelines on
Community Collective Marks, Section 11.5.1 "An appli cant for a collective mark must submit regulations
governing its use." Section 11.5.2 "The regulations must specify: a) the name of the applicant's organisation and
the address of its office; b) the object of the organisati on; c) the bodies authorized to represent the organisation;
d) conditions for membership; e) the persons authorized to use the mark; f) if there are conditions for use of the
mark, including sanctions, these must be included; and g) if the mark designates the geographical origin of the
goods or services, authorization for any person whose goods or services originat e in the geographical area
concerned to become a member of the organization." See discussion above for relevant US regulations.
48 TRIPS Agreement preamble, third "Recognizing" clause.

52. The EC has suggested in its responses to the Panel's questions that the specific requirements
for inspection structures are flexible. But the EC has overstated this flexibility. First, the EC states at
paragraph 129 of its responses to the Panel's questions that "[t]he EC merely requires that the
conditions of Regulation 2081/92 re garding product specifications and inspections are met as regards
the specific product for which protection is sought." Th is implies that an inspection structure that is
limited to ensuring compliance with the particular specifications for the individual GI for which
registration is sought satisfies the Article 12a(2) requ irement. This impression is encouraged by the
EC's further response to the Panel at paragraph 13 1 that "it is not excluded" that the holder of a
certification mark outside the EC could function as an inspection structure "[i]f the holder is not itself
a producer or processor, and is independent of them... Otherwise, it would be necessary to establish an
independent inspection structure which offers the necessary guarantees of independence and
impartiality."

53. This response ignores two facts. First, Artic le 12a(2) specifically requires a declaration by
the WTO Member that the "structures provided for in Article 10 are established in its territory". The
structures provided for in Article 10 require inspection structures that ensure that agricultural products
and foodstuffs bearing a protected name meet the re quirements laid down in specifications. This is a
requirement for a broad inspection structure capable of performing this function for all agricultural
products and foodstuffs. A certification or collectiv e mark holder, by contrast, would only ensure
compliance with his particular mark. Second, Article 10 requires much more than a general
"guarantee of independence and impartiality." Ra ther it imposes specific requirements that go far
beyond what is necessary to assure the integrity of the geographical indication. It requires that the
inspection authority have qualified staff and resources "permanently at their disposal" to carry out
inspections. The inspection authority must be able to take steps "necessary to ensure that [the GI
Regulation] is complied with;"
49 if the inspection authority is a private body, it must fulfill the
requirements of a European standard for insp ection authorities (standard EN 45011), and must
"continue to be responsible vis-a-vis the EC member State50 for all inspections."

54. In sum, and contrary to the EC's responses to the Panel, it does not appear that, under the GI
Regulation, a certification mark holder would satis fy the requirements for an inspection structure
under the EC GI Regulation. And yet, as discussed above, that certification mark holder would satisfy
the requirements imposed upon it by a WTO Member th at protects geographical indications through a
certification mark system.

55. But even if certain certification mark holders might qualify as inspection authorities under the
EC GI Regulation, the requirement that the WTO Me mbers establish the EC inspection structures still
provides less favorable treatment to non-EC nationals, for two reasons.

56. First, the EC GI Regulation does not merely require assurances that the specifications in the
GI application will be complied with and that there are rules to en sure that compliance.
51 Rather, it
requires that the government of the WTO Member itsel f assure that compliance. This is clear from
the GI Regulation's requirement, under Articles 10 a nd 12a, that it is the WTO Member concerned
that must declare to the EC that the Article 10 insp ection structures are established in its territory, and
from the requirement that private inspection bodies continue to be responsible to the WTO Member
for all inspections. 52 But other WTO Members may not have a system where they are directly

49 This is a broader responsibility than simply en suring that the products meet the specifications, and
would appear to include the enforcement of the GI rights provided for in Article 13 of the EC GI Regulation.
50 A requirement that the United St ates assumes should be read as a reference to the relevant WTO
Member.
51 As discussed above, such a requirement is common with respect to applications for certification and
collective marks, both in the United States and in the EC.
52 Article 10(3) of the EC GI Regulation.

involved in the inspections, or where the pr ivate inspection author ities are "responsible" vis-a-vis the
government for all inspections. Rather, as noted above, some WTO Members rely on a system in
which the certification or collective mark holders th emselves ensure that a certification or collective
mark is being used in conformity with the terms of its issuance. The nationals of any such WTO
Members are thus unable, under the GI Regulation, to register and protect their GIs in the EC.

57. Second, although an inspection authority that is completely independent of the producers and
directly responsible to the government is one way ass ure that the specifications for the GI are met, but
it is not the only way. The EC's recent response that certification mark owners might qualify as
Article 10 inspection authorities – because they themselves do not produce the subject product –
would appear to exclude other GI rightholders who ar e able to assure the integrity of their GI. One
example is collective mark owners, who may both own a mark protecting a geographical indication,
and police compliance with that mark.
53 Collective marks can be owned collectively by all producers
in a particular region, and so are a good fit for protecting geographical indications. 54 Under the EC's
own analysis, however, it would appear that, in the absence of a separate additional inspection
structure as to the specific product, directly responsib le to the US Government, collective owners of a
GI in the United States would not be able to register their GI in the EC. Yet collective mark owners
have as much of an interest in protecting the inte grity of their mark as certification mark owners.
While collective mark owners may not have a separate and independent inspection structure
responsible to the government, they do generall y have a rules for admission to the collective
organization, the members of which are then au thorized to use the mark upon admission (and
compliance with the rules for the u se of the mark). There is no reason that such a system should be
considered a priori inadequate to qualify for an EC GI Registration.

58. Further, the United States is not alone in its requirements for collective marks. The EC
Trademark Directive allows the registration by EC member States of terms that designate the
geographical origin of the goods as both guarantee or certification marks and as collective marks.
55 In
addition, since the Paris Convention requires the pr otection of collective marks, and since, as WIPO
has noted, many WTO Members protect GIs through coll ective marks, it would appear that the same
requirements that ensure the integrity of collective marks should assure the integrity of registered GIs.
In other words, it should be sufficient under the EC GI Regulation that the owner of the collective
mark can show that the product meets the definition of GI in Article 2 of the EC GI Regulation and
can give appropriate assurances that he exercises control over the use of the mark of the goods
produced to ensure compliance with the standards of the collective.

59. Nor are the examples of certification and coll ective marks exhaustive. In the United States
and other WTO Members, common law GI owners – that is, those owners that have acquired rights in
GIs through use, as well as those GI owners protecting their GIs through unfair trade statutes – may
also have their own internal quality control system that ensures adequate control over the use of the
GI.

53 In the United States, for instance, the Lanham Ac t provides that the owner of a certification mark
cannot use the mark on goods, but only for advertising (anti-use by owner rule). In contrast, the owner of a
collective mark is not barred from using the collective mark as a trademark for goods. "… [T]he collective itself
may also use the same mark as a trad emark for the goods covered by the co llective trademark or service mark.
See TMEP §1305. The 'anti-use by owner' rule of §4 of the Trademark Act, 15 US C. §1054 does not apply to
collective marks." TMEP 1303.01.
54 See Footnote 43, SPEECH/03/292 Pascal La my EU Trade Commissi oner Creation of the
Organisation Geographical Indications Network (ORIGIN) Brussels, June 11, 2003.
55 Article 15 of the First Council Directive of 21 December 1988 to approx imate the laws of the
Member States relating to registered trademarks (89/104/EEC), OJ L 40, February 2, 1989, p. 1.
Exhibit COMP-7.a.

60. In sum, the EC cannot require a WTO Me mber to establish and enforce an EC-style
inspection structure as a precondition to that WTO Me mber's nationals being able to register and
protect GIs in Europe. Such a requirement is inc onsistent with the EC's WTO obligation to provide
non-EC nationals treatment no less favorable than that accorded its own nationals, and is at odds with
the status of GIs as private rights.

61. It is worth highlighting that the United States is not challenging in this dispute the EC basic
standard for what constitutes a GI. The US position is that if a product meets that standard – i.e., is an
agricultural product or foodstuff originating in a region outside the EC which possesses a specific
quality, reputation or other characteristics attributab le to that geographic origin – the non-EC national
should be able to register and protect it in the EC under the GI Regulation, regardless of whether his
home government has established the same inspection structures as the EC member States.

62. In brief, the EC's requirement that the Unite d States establish EC-style inspection structures to
enforce GIs is simply equivalence by another name : the EC will not protect the GIs of US nationals
unless the United States establishes th e same inspection structures, w ith the same responsibilities and
resources, that are required of EC member States. But other WTO Members have the freedom under
the TRIPS Agreement to set up a system that is diff erent from the EC's for protecting GIs, and the EC
cannot make protection of GIs conditional on other Members' adopting an EC-style system. The
United States, for one, has not adopted the EC's a pproach to protecting GIs, and does not require an
EC-style inspection structure. This fact, however , should not prevent US nationals from obtaining GI
protection in the EC on the same basis as EC nationals.

C. T
HE EC GI REGULATION ACCORDS LESS FAVORABLE TREATMENT TO NATIONALS OF ALL
OTHER WTO MEMBERS THAT DO NOT OR CANNOT EVALUATE AND PROCESS EC GI
REGISTRATION APPLICATIONS OR OBJECTIONS AND ADVOCATE TO THE EC ON BEHALF OF ITS
NATIONALS
63. Two things have become apparent in connecti on with the EC GI Regulation's requirement that
only WTO Members, and not their nationals, are ab le to submit GI registration applications and
objections to the EC. (This is in contrast to the situation for EC nationals, for whom the GI
Regulation provides a direct means to submit applica tions and objections). First, this requirement
imposes a significant burden on the WTO Member involved – a burden that many may be unable to
assume – resulting in a lack of access to the EC GI system by their nationals. Second, this
requirement for national government intervention is both unwarranted and unnecessary. The result is
that nationals of non-EC WTO Members are unnecessarily denied the same access to the EC GI
system that EC nationals have.

1. The EC GI Regulation imposes a signif icant burden on other WTO Members to
administer and enforce the Regulation
64. With respect to the first point, it is plain that, under the GI Regulation, WTO Members must
play a substantial and active role in trying to convince the EC to accept the GI registration
applications and objections of its nationals, submitting themselves to the EC's authority and
committing themselves to administer and enforce the EC GI Regulation in their territory. With
respect to GI registration applications, Article 12a (2) of the GI Regulation would require the United
States to (1) make a determination that the requirements of the GI Regulation are satisfied; (2) provide
a description of the legal provisions and usage on the basis of which the geographical indication is
protected or established in the United States; (3) make a declaration that the full inspection structures
for agricultural products and foodstuffs are established in the United States ( i.e., the same inspection
structures required of EC member States); and (4) submit other documentation that would support the
application. The United States notes that this is not a simple matter, because it is not even clear on

what basis a US government authority would be in a position to assess whether the application meets
the requirements of the EC GI Regulation.

65. Nevertheless, in response to the Panel's ques tion, the EC made clear that this obligatory
evaluation of an EC GI registration application by the WTO Member would require substantial work
and expertise. In explaining why the EC GI Re gulation required that WTO Members evaluate the EC
GI applications, the EC stated:

80. First, the evaluation of whether a name fulfils the conditions for protection as
a geographical indication requires familiarity with a host of geographical, natural,
climatic and cultural factors specific to th e geographical area in question. Moreover,
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 St ate, it is the third country's authorities
which are best placed to evaluate such factors... .
81. Second, the evaluation of the applica tion 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 th e application to be accompanied 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 issues 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 thir d 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 th e Regulation, in particular concerning the
link with the geographical area, requires in-d epth knowledge of the conditions related
to this area, as well as the possibility to verify on the spot the relevant claims made in
the application. 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 fo resees 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 the 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
more familiar with the area in question, this should help speed up the registration
process. Moreover, frequently these 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.56

56 EC Responses to Questions of the Panel, paras. 82-84.

66. By its own admission, the EC is placing a substantial burden on other WTO Members to
administer and enforce the EC's GI Regulation – and the EC will not register the GI of any national
whose home government does not agree to shoulder this burden. Indeed, it would appear that the EC
is envisioning not so much the transmission of an a pplication as it is an in-depth analysis of whether
the EC GI Regulations requirements are met – in cluding on-site verifications – and, significantly, on-
going discussions or negotiations with the EC throughout the process concerning whether the
registration applications would be accepted. The EC made a similar point with respect to the need for
WTO Members to process objections to GI registrations on behalf of its nationals.
57

67. This process resembles more the submissi on of one government to another government's
unilateral assertion of authority it does an application for protection, or an objection, from a private GI
rightholder. It is also very different from EC and member State rules concerning the filing of
applications for collective and certification marks, which do not require any government involvement
at all on behalf of the applicant.
58

68. In any case, a national from a WTO Member th at does not have a mechanism for undertaking
all that the EC is requiring with respect to app lications and objections does not have access to the EC
registration system for protecting GIs or for objecti ng to GIs. By contrast, an EC national seeking to
have his home-based GI protected or to object to a GI registration has a pre-established mechanism
for doing so through the EC GI Regulation, wh ich requires EC member States to process such
applications and objections.

69. In sum, the EC GI Regulation accords less fa vorable treatment to non-EC nationals than it
accords to EC nationals with respect to the protection of geographical indications.

70. The EC has responded that this is equal tr eatment, not less favorable treatment, because EC
nationals also have to send registration applica tions and objections through their member States.
59
The United States recalls again that it is up to the EC to demonstrate that different procedures applied
to non-EC nationals as compared to EC nationals do not amount to "less favorable treatment." 60 In
fact, the EC's assertion of "equality" is incorrect, beca use, just as in the case of inspection structures,
EC member States are required by the GI Regulation to process the applications and the objections,
and so EC nationals are directly provided the ability to register their GIs and object to the registration
of GIs. Other WTO Members have no such oblig ation – under the TRIPS Agreement or elsewhere –
and therefore the GI Regulation accords less favorable treatment for the nationals of those Members
that do not "comply" with the EC GI Regulation.

71. The EC has also responded that any WTO Member's "unwillingness" to "cooperate" means
that any resulting less favorable treatment is due to "their own attitude", and not to the GI
Regulation.
61 With all due respect, the EC has provided the direct means for its own nationals to
apply for the registration of GIs and to achieve EC-w ide protection of those GIs. It has also provided
the direct means for its nationals to object to the regi stration of GIs. It has provided none of this for
non-EC nationals. To the contrary, it has erected e normous barriers to those nationals – effectively
requiring unilaterally that other WTO Members administer and enforce the EC GI Regulation which,
the EC's protestations notwithstanding 62 impose a considerable burden on those WTO Members, and
is not required by any WTO Agreement.

57 EC Response to Questions of the Panel, para. 87.
58 See discussion under section III.B.2 above.
59 E.g., EC First Written Submission, para. 129.
60 See US – Section 337, para. 5.11.
61 EC Response to Questions of the Panel, para. 55.
62 E.g., EC First Written Submission, para. 130.

72. The national treatment violation is, therefore, not due to the US "attitude", or the "attitude" of
all other WTO Members that have not "complied" with the unilateral requirements of the EC, but
rather to the barriers erected against non-EC WTO Member nationals in the GI Regulation.

2. The GI Regulation's requirement for extensive WTO Member involvement is
unwarranted and unnecessary
73. With respect to the second point noted above, it is simply untrue that the extensive
involvement of WTO Members is necessary or even a ppropriate in the process of either registering a
GI or objecting to the registration of a GI. In th e case of the United States, where GIs for agricultural
products and foodstuffs are protected through co llective marks and certification marks, the US
government does not have any specialized knowledge or expertise that would render it better qualified
than the rightholder, or, indeed, the EC, to ma ke representations as to whether the specifications
submitted by the rightholder meet the requirements of the EC GI Regulation. Indeed, to the contrary,
it would seem that the EC, and not the United States Government, would be in a position to make that
determination, particularly, for instance, with resp ect to whether a US GI has a reputation in the EC
market. The GI applicant in the United States knows best the characteristics of his product that render
it eligible for protection under the GI Regulation, and knows best what specifications under Article 4
of the GI Regulation his product meets. The EC should assess whether those specifications submitted
by the applicant meet the EC's GI Regulati on requirements on their own merits, without the
intercession or intermediation of the United States G overnment. Indeed, this is precisely what the
United States does in considering whether to register a certification or collective mark referring to a
geographic area – including, significantly, regi stration applications received from EC nationals
referring to areas in the EC. The USPTO relies on the declarations and representations of the
certification or collective mark holder and relies on competitors in the marketplace to challenge the
registration if the owner fails to uphold th e standards provided for in the registration.
63 This is also
the practice of other jurisdictions which accep t certification marks and collective marks for
registration and which protect geographical indications through such marks.

74. In sum, it is neither appropriate nor necessary for the EC GI Regulation to require that other
WTO Members administer and enforce the GI Regulation, and the condition that those Members do
so results in less favorable treatment being accorded to their nationals than to the nationals of the EC.

D. T
HE REQUIREMENT THAT NON -EC GEOGRAPHICAL INDICATIONS – BUT NOT EC
GEOGRAPHICAL INDICATIONS – BEAR A COUNTRY OF ORIGIN MARKING PROVIDES LESS
FAVORABLE TREATMENT TO NON -EC NATIONALS THAN TO EC NATIONALS WITH REGARD TO
THE PROTECTION OF GEOGRAPHICAL INDICATIONS.
75. The United States has argued that Article 12(2) of the EC GI Regulation imposes a special
rule that non-EC GI names can be authorized only if the country of origin is visibly indicated on the
label. The EC's two responses and the US rebuttals are as follows.

63 For example, the US Trademark Act provides that "any person who believes that he is or will be
damaged...by the registration of a mark" may file a petiti on to cancel the registration of a mark. A certification
mark registration may be challenged on the "ground that the registrant (A) does not control, or is not able
legitimately to exercise control over, the use of such mark, or (B) engages in the production or marketing of any
goods or services to which the certification mark is app lied, or (C) permits the use of the certification mark for
purposes other than to certify, or (D) discriminately re fuses to certify or to continue to certify the goods or
services of any person who maintains the standards or c onditions which such mark certifies." 15 US C. Section
1064(5).

76. First, the EC argues that this requirement a pplies only where a third country name is identical
t o a n E C n a m e .
64 The United States notes, however, that this requirement for a country of origin
indication, although it appears in Article 12(2) after a discussion of identical names, is set apart as a
separate, albeit unnumbered, paragraph under Ar ticle 12, which addresses third country GIs in
general. Thus, it appears to relate to all
 third country GIs, and not just to third country GIs that are
identical to EC GIs.

77. Second, the EC claims that this rule app lies to both EC and non-EC products equally. The
United States notes, however, that the provision at i ssue falls under Article 12, which relates to the
conditions of registration of non-EC GIs, not of EC GIs. The United States notes further that there
appears to be no support in the text of the Regulati on for the EC's assertion that the country of origin
requirement applies to whichever GI – EC or third country – is registered later in time. That provision
appears, rather, to be directed solely at the author ization of third country GIs. Therefore, if a third
country GI is registered first, and then an applica tion for an identical EC name is received, it is not
clear on what basis the EC authorities would refe r to Article 12 at all to determine under what
conditions the EC
 name can be authorized.

78. Consequently, the requirement that non- EC geographical indications – but not EC
geographical indications – bear a country of origin marking results in less favorable treatment of non-
EC nationals than of EC nationals with regard to the protection of geographical indications

E. T
HE EC GI REGULATION REQUIRES DOMICILE OR ESTABLISHMENT IN THE EC AS A
CONDITION FOR THE ENJOYMENT OF GI RIGHTS , CONTRARY TO THE OBLIGATION OF
ARTICLE 2(3) OF THE PARIS CONVENTION
79. For those nationals from WTO Members who do not comply with the requirements of the EC
GI Regulation, the only way to enjoy their intellectual property rights with respect to geographical
indications is to become established or domiciled in the EC, and therefore to qualify directly to object
to the registration of GIs under Article 7(3) of the GI Regulation, or to produce or obtain the products
(for which they seek GI protection) in the EC. Th is is contrary to its Paris Convention obligation
under Article 2(2) not to impose any requirement as to domicile or establishment in the EC "for the
enjoyment of industrial property rights." The EC h as two responses: first, a technical one that this
plain violation is outside the Panel's terms of reference, so the Panel cannot consider it.65 Second, that
a requirement that a legal person produce or obtain a product in the EC is not a requirement of
"establishment" in the EC. Further, the EC appa rently argues – somewhat surprisingly – that the
requirement that, in order for a person to object to a registration under Article 7 of the GI Regulation,
he must apply to the member State in which he "resides or is established" 66 is also not a requirement
of "domicile or establishment."67 Both of these arguments are baseless.

1. Article 2(2) of the Paris Convention is within the Panel's terms of reference
80. The US panel request contained both a statement that the GI Regulation failed to accord
national treatment to non-EC nationals and a specific reference to Article 2 of the Paris Convention, a
reference that plainly includes both paragraphs 1 and 2 of Article 2. 68 Neither paragraph uses the
precise term "national treatment", but both togeth er define that obligation. The non-establishment
requirement of Article 2(2) follows immediately af ter Article 2(1), linked by the word "however",
which indicates that what follows is connected to and part of the obligation in Article 2(1).

64 E.g., EC First Written Submission, para. 133.
66 EC GI Regulation, Article 7(3).
67 EC First Written Submission, paras. 188-189.
68 WT/DS174/20, August 19, 2003.

Article 2(1) specifically provides that the same a dvantages must be provided to other nationals as to
one's own nationals; and Article 2(2) specifies that a Member may not require domicile or
establishment as a condition for the enjoyment of industrial property rights.

81. The link between these two paragraphs and their importance to "national treatment" is
emphasized by this very proceeding. As the Unite d States argued in its first submission, requiring an
effective establishment in the EC as a preconditio n to obtaining GI protection is tantamount to a
requirement that, in order to receive national treatme nt, a legal person must, in effect, become an EC
national. In other words, the GI Regulation's re quirement for a commercial establishment in Europe
as a precondition to claiming the same rights as nationals is simply another aspect of its denial of
national treatment to nationals of other WTO Member s, a claim clearly within this Panel's terms of
reference.

82. In addition, the United States notes that the en tirety of Article 2 of the Paris Convention – not
just Article 2(1) – is provided an annotated title "N ational Treatment for Nationals of the Countries of
the Union" in the WIPO-published versions of the Convention. Finally, one of the main thrusts of the
US complaint against the EC GI Regulation is that , to receive GI protection under the Regulation,
persons have to set up a legal en tity producing or obtaining products in the EC. Legal entities
producing or obtaining products outside the EC ar e denied access to this system (barring compliance
with substantial requirements by the WTO Member con cerned). It can hardly be a surprise to the EC
that the United States is claiming, as one aspect of it s violation of national treatment obligations, that
the EC is requiring establishment in the EC, in violation of Article 2(2) of the Paris Convention.

83. In short, because both the narrative descripti on and the specific citation to Paris Convention
Article 2 in the US Panel request include the oblig ations in Article 2(2), and because the EC clearly
was aware of the nature of the US complaint, a nd could not have suffered any prejudice, the US
claims under Article 2(2) are entirely within this Panel's terms of reference.

2. Nationals of WTO Members who do not co mply with the EC GI Regulation's
requirements must be domiciled or established in the EC in order to enjoy the GI rights
provided under the EC GI Regulation
84. The EC's responses to this argument miss the ma rk. With respect to eligibility for registering
GIs, the EC's primary argument is to claim, with no analysis or conclusion, that the "business
establishment" in the EC, inter alia, growing agricultural products in the EC, would not "appear to
constitute 'an establishment' within the meaning of Article 2.2 of the Paris Convention."
69 The United
States submits that, to the contrary, and the EC's unsupported assertion notwithstanding, a
requirement to establish a business producing or obtain ing agricultural products and foodstuffs in the
EC is a requirement of "establishment" in the EC. Indeed, as discussed above in section II.A ("The
EC GI Regulation discriminates based on nationality"), the EC's requirement appears to be tantamount
to a requirement that the non-EC national – with a real and effective commercial establishment
producing agricultural products in a non-EC WTO Me mber – set up a real and effective commercial
establishment in the EC as a condition for taki ng advantage of the "domestic" track for GI
Registration.

85. The EC also claims that the US is in effect arguing that geographical indications should be
protected even if the products in question do not originate in the area in question.
70 This is untrue.
What the United States is arguing is that the EC cannot require that the geographical area to be
protected be in the EC. Yet, for any national from a WTO Memb er that does not comply with the GI
Regulation's requirements, that is precisely what the EC is requiring.

86. Finally, with respect to the right of objecti on, the EC claims that the GI Regulation simply
allows persons from other WTO Members to object to registrations.
71 This response misses the point.
Nationals from WTO Members who do not assess objections from their nationals for compliance with
the GI Regulation must reside or become established in the EC in order to object under the Article 7
objection procedures.
72 This is plainly a requirement of domicile of establishment in the EC for the
enjoyment of an industrial property right.

F. T
HE EC GI REGULATION IMPOSES ADDI TIONAL REQUIREMENTS ON NON -EC NATIONALS
DESIRING TO OBJECT TO THE REGISTRATION OF A GI THAT ARE MORE BURDENSOME THAN
THOSE IMPOSED ON EC NATIONALS
87. In addition to the above inconsistencies with the EC's national treatment obligations, the US
first written submission explained that, while non- EC nationals must have a "legitimate interest"
under Article 12d in order to object to the registrati on of an EC-based GI, an EC national wishing to
object under Article 7(3) may do so if it is merely "legitimately concerned".73 In addition, because the
GI Regulation accords more favorable treatment to EC nationals than to non-EC nationals with
respect to the registration and protection of GIs, it is harder for non-EC nationals than EC nationals to
have a "legitimate interest" or a "legitimate economic interest" that would serve as grounds for
objection under 12d.

88. The EC's sole response to this claim
74 is that there is no difference between the two standards.
The United States submits, however, that a person ma y be "concerned" without his concern rising to
the level of a "legitimate interest". An "interest", as a noun, generally implies some right to property
or to a use or benefit relating to property. "Con cerned" by contrast, is broader, and encompasses
"interested, involved, troubled, anxious, showing concern." 75 The "legitimate interest" standard for
non-EC nationals was introduced in April 2003. If the standard were the same as "legitimately
concerned" it would have been logical to use the sam e words to describe it, instead of words that state
a more restrictive standard. In the face of this plain difference in language, the EC has not sustained
its burden of rebutting the presumption that this amounts to less favorable treatment of non-EC
nationals.

IV. THE EC GI REGULATION IS IN CONSISTENT WITH THE NATIONAL
TREATMENT OBLIGATIONS OF THE GATT 1994
A. T
HE EC GI REGULATION'S REQUIREMENTS THAT OTHER WTO MEMBERS ESTABLISH SPECIFIC
INSPECTION STRUCTURES AND BECOME ACTI VE PARTICIPANTS AND ADVOCATES IN
PROSECUTING ITS NATIONALS ' GI REGISTRATIONS AND OBJECTIONS ACCORDS LESS
FAVORABLE TREATMENT TO NON-EC PRODUCTS THAN IT DOES TO EC PRODUCTS.
89. In its first written submission, the United States showed that the EC GI Regulation was
inconsistent with the EC's obligation under Article III:4 of the GATT 1994 to accord no less favorable
treatment to products originating in the territory of other Members than it accords to like products of
national origin. The EC does not contest that th e imported products are "like" domestic products, 76
and does not contest that the EC GI Regulation is a measure that falls within the scope of

72 EC GI Regulation, Article 7(3).
75 New Shorter Oxford English Dictionary (Fourth Edition, 1993), pp. 467 ("concerned") and 1393
("interest").

Article III:4.77 The only issue, therefore, is whether the EC GI Regulation accords imported products
"less favorable treatment" than that accorded to the like domestic products.78

90. The EC contends that it does not, for the sa me reasons that it does not accord "less favorable
treatment" to nationals of other WTO Members under the TRIPS Agreement: (1) there is no
reciprocity and equivalence requirement for WTO Members; and (2) the requirement for inspection
structures and the requirement that WTO Members themselves process GI registration applications
and objections constitutes "equal" not "less favorable" treatment for products of non-EC origin.
79 The
first of these arguments has been addressed above, and will not be addressed separately here.

91. The EC's argument that the treatment accord ed non-EC products is "equal" to that accorded
EC products is not correct. First, that the EC has chosen to establish particular inspection structures in
the EC in order to ensure that EC producers comply with the EC GI Regulation does not mean that it
is "equal treatment" of like products to impose th e requirement for the same inspection structures on
other WTO Members. To the contrary; to do so is to condition the granting of GATT 1994
Article III:4 rights on the WTO Member in question adopting the same compliance structure as the
EC. This is precisely the "reciprocity" and "equiva lence" conditionality that the national treatment
obligation was designed to avoid.

92. A product from the United States that meets the requirements of the GI Regulation – that is,
an agricultural product or foodstuff originating in a region of the United States which possesses a
specific quality, reputation or other characteristics attr ibutable to that geographic origin – must, under
Article III:4 of the GATT 1994, be accorded no less favorable treatment than an EC product that
meets those requirements. But under the GI Regula tion, an EC product that qualifies for protection
due to characteristics attributable to its origin can be registered and protected under the EC GI system.
By contrast, a US product that similarly qualifies fo r registration and protection due to characteristics
attributable to its origin is denied regi stration and protection in the EC. This is not because the
product itself does not possess the necessary characteristics related to its origin. Rather, it is because
the United States has not established the EC-mandated inspection structures.

93. In other words, a qualifying EC-origin product can be registered and protected under the EC
GI Regulation, while a US product that is "like" th at EC product in every respect is denied access to
that system. And, of course, the consequence of registration and protecti on – denied the US product
but granted the EC like product – is all of the co mpetitive advantages and benefits bestowed on GI
products under the EC system.
80

94. The United States submits that this amounts to treatment of non-EC products that is
significantly less favorable than treatment accorded EC products, contrary to Article III:4 of the
GATT 1994.

95. Second, and similarly, the requirement that WTO Members themselves become active
participants and advocates for their nationals in an alyzing and submitting GI re gistration applications
and objections also amounts to less favorable treatme nt of non-EC products. As just discussed, a US
product that meets the requirements of the EC GI Regul ation should be eligible to be registered and
protected under that Regulation. The require ment that the WTO Member have substantial
participation in this process – a requirement imposed unilaterally by the EC and not otherwise
required by any WTO agreement – is both burde nsome and unnecessary, and acts as an additional

78 See Appellate Body Report, Korea – Various Measures on Beef, para. 133.
79 See EC First Written Submission, para. 207; First Oral Statement, paras. 71 and 45.
80 These benefits were detailed in the US First Written Submission, e.g., at paras. 28-30 and 61-62, and
will not be repeated here.

barrier to non-EC goods seeking access to the EC GI system. This is not a barrier faced by EC goods,
because the EC GI Regulation itself mandates author ities in the EC to process applications and
objections.

B. T
HE REQUIREMENT THAT NON -EC PRODUCTS BE ENCUMBERED BY A COUNTRY OF ORIGIN
INDICATION ON THE LABEL IS INCONSISTENT WITH THE NATIONAL TR EATMENT OBLIGATIONS
OF THE GATT 1994
96. The United States has argued that Article 12(2) of the EC GI Regulation imposes a special
rule that non-EC GI names can be authorized only if the country of origin is visibly indicated on the
label. The EC's three responses and the US rebuttals are as follows.

97. First, the EC argues that this requirement a pplies only where a third country name is identical
to an EC name.
81 As above, the United States notes, however, that this requirement for a country of
origin indication, although it appears in Article 12(2) below a discussion of identical names, is set
apart as a separate, albeit unnumbered, paragraph under Article 12, which addresses third country GIs
in general. Thus, it appears to relate to all third country GIs, and not just to third country GIs that are
identical to EC GIs.

98. Second, the EC claims that th is rule applies to both EC and non-EC products equally. Again,
as above, the United States notes that the provision at issue falls under Article 12, which relates to the
conditions of registration of non-EC GIs, not of EC GIs. The United States notes further that there
appears to be no support in the text of the Regulati on for the EC's assertion that the country of origin
requirement applies to whichever GI – EC or third country – is registered later in time. That provision
appears, rather, to be directed solely at the author ization of third country GIs, regardless. If a third
country GI is registered first, and then an applica tion for an identical EC name is received, it is not
clear on what basis the EC authorities would refer to Article 12 to determine under what conditions
the EC
 name can be authorized.

99. Finally, the EC argues, in effect, that a special country of origin labeling requirement cannot
be inconsistent with national tr eatment obligations, because Article IX:1 of the GATT 1994 contains
only an MFN obligation, and not a specific national treatment obligation, with respect to "marking
requirements". But the EC's argument ignores the fact that the EC GI Regulation does not contain a
general "marking requirement" for goods. Rather, it is a special rule that is triggered by the fact that a
third country product is being authorized to use a pr otected GI name, and is intended to encumber the
non-EC GI, while not so encumbering the EC GI. The United States does not believe that, under
these circumstances, the EC is exempt from its oblig ation to provide no less favorable treatment to
non-EC products.

C. T
HE EC HAS PRESENTED NO INFORMATION WHATSO EVER THAT THE INCONSISTENCIES WITH
GATT 1994 ARTICLE III:4 ARE EXCUSED BY ARTICLE XX(D) OF THE GATT 1994
100. The United States presented information and ar guments showing that the EC GI Regulation is
inconsistent with the EC's national treatment ob ligations under Article III:4 of the GATT 1994. In
addition to its general denials that there is less favorable treatment of no n-EC products, the EC has
also suggested, in a conclusory fashion, that any such inconsistency would be excused by
Article XX(d) of the GATT 1994. 82 As the party asserting that its GI Regulation falls within the
scope of the Article XX exceptions, it is the EC, as the party asserting the defense, that bears the
burden of proof. As the Appellate Body noted in Japan – Apples , "although the complaining party

bears the burden of proving its case, the responding party must prove the case it seeks to make in
response."83 The Appellate Body also noted in United States – Shirts and Blouses, page 14, that:

the burden of proof rests upon the party, whether complaining or defending, who
asserts the affirmative of a particular claim or defence. If that party adduces evidence
sufficient to raise a presumption that what is claimed is true, the burden then shifts to
the other party, who will fail unless it adduces sufficient evidence to rebut the
presumption." (footnotes omitted)
101. The EC's entire submission to this Panel with respect to Article XX(d) is that

The requirements at issue are necessary in order to ensure that only those products
which conform to the definition of geographical indications contained in Article 12(2)
of Regulation 2081/92, which is itself full y consistent with the GATT, benefit from
the protection afforded to geographical indications by Regulation 2081/92.84
102. But this is little more than an imprecise paraphrasing of Article XX(d) itself. There is no
explanation of, or information concerning, how th e WTO Member's significant involvement in the GI
Registration application process – including the declar ations that the WTO Member must make to the
EC – or its involvement in the "objection" pro cess is "necessary" to "secure compliance" with WTO-
consistent laws or regulations, which is the limited basis on which Article XX(d) permits an exception
to GATT 1994 obligations. Nor has the EC explaine d how the particular inspection structures it is
requiring as a precondition to the registration of non-EC GIs are "necessary to ensure [such]
compliance". Successfully proving the entitlement to this exception to GATT 1994 obligations
involves much more than a conclusory statement, which provides neither the United States nor the
Panel a foundation on which to base any analysis wh atsoever of the EC's affirmative defense to a
GATT violation.

103. The United States does not see anything in Ar ticle XX(d) that would excuse the EC from its
GATT 1994 obligations, and the EC has not provided any information or evidence that it does.
Therefore, this Panel should find that the EC GI Regulation's inconsistency with the GATT 1994 is
not excused by Article XX(d) of the GATT 1994.

V. THE EC GI REGULATION IS INCONSISTENT WITH THE MFN OBLIGATIONS
OF THE TRIPS AGREEMENT AND THE PARIS CONVENTION
A. MFN
 OBLIGATIONS WITH RESPECT TO THE NATIONALS OF NON-EC WTO MEMBERS
104. The United States argued in its first written submission that the EC GI Regulation's
inconsistencies with the MFN obligations of the TRIPS Agreement and the Paris Convention derived
from the same conditions for GI protection imposed on WTO Members that give rise to
inconsistencies with the national treatment ob ligation under the TRIPS Agreement and the Paris
Convention. That is, the nationals of any country that satisfies the GI Regulations requirements with
respect to

 – reciprocity and equivalence

 – specified inspection structures, and

83 Appellate Body Report, para. 154.

 – the substantial participation in administ ering and enforcing the EC GI Regulation on
behalf of its nationals

can register and protect their home-based GIs and ca n object to the registration of GIs. Any national
of a WTO that does not satisfy these requirements, by contrast, cannot do so. Consequently, the EC
GI Regulation does not "immediately and unconditiona lly" accord to nationals of all WTO Members
the advantages, favors, privileges, or immunities accorded to EC nationals. In addition to the
arguments refuted in the "national treatment" section above, the EC protests that it has not yet applied
this Regulation to benefit the nationals of qualifying countries.
85

105. But the lack of third country GI registrations under the GI Regulation does not mean that it is
immune from challenge. The EC cites several disputes in which there was a discriminatory
application of a law, implying that this is a requirement to challenge a measure on MFN grounds
86 but
ignores that there are, equally, disputes in which a discriminatory measure had not yet been applied,
but was nonetheless found inconsistent with obligations. In one such dispute, United States –
Superfund, the panel explained that the obligations in that dispute:

are not only to protect current trade but also to create the predictability needed to plan
future trade. That objective could not be attained if contracting parties could not
challenge existing legislation mandating actions at variance with the General
Agreement until the administrative acts impl ementing it had actually been applied to
their trade.
The United States has not, in fact, challenged any par ticular application of the GI Regulation on MFN
grounds; rather it is challenging this aspect of the EC GI Regulation on its face.

106. The fact is that the conditions for protecti on described above – conditions that are necessarily
determined on a country-by-country basis – reward na tionals of those individual countries that agree
to adopt EC structures and systems for protectin g geographical indications and that agree to
administer and enforce the EC GI Regulation in their territory. Nationals from those countries receive
as favorable treatment as EC nationals. Nationals from countries that do not so agree are precluded
from accessing the EC GI Regulation protection system.
87 In this connection, the EC's quotation of
the Canada – Autos panel report, 88 discussing why not all non-product-related condition are per se
inconsistent with Article I:1 of the GATT 1994 is not relevant.

107. There is no room under the EC GI Regulation for the Commission to determine that all WTO
Members satisfy the conditions of the GI Regulati on. Some WTO Members may have the EC-style
inspection structures, others do not; some WTO Memb ers might be able to prosecute GI registration
applications successfully on behalf of their nationals , and others cannot. There is nothing that the EC
can do in administering the EC GI Regulation that will treat nationals of all WTO Members as
favorably as each other and as favorably as EC nationals.

108. In other words, any application of the EC GI Regulation to a third country would result in a
failure to accord MFN treatment to nationals of all third country WTO Members. The Commission
has no ability to avoid this result under the Regulation. And, of course, the refusal to apply the GI
Regulation to other third countries at all – which is theoretically one way of assuring equal treatment

85 EC First Written Submission, paras. 239-245.
86 EC First Written Submission, para. 242, citing EEC – Imports of Beef from Canada and Belgian
Family Allowances.
87 As discussed above in the context of "national treatment", the GI Regulation discriminates on the
basis of nationality. See Section III.A above.

among nationals of all third country WTO Member s – would be inconsistent with the national
treatment obligation. In any case, the GI Regul ation does not appear to permit the Commission to
refuse to apply the GI Regulation to all third countries.

109. Accordingly, even in the absence of a specifi c application to any third country, the EC GI
Regulation is inconsistent with the MFN obligations of the GI Regulation.

B. MFN
 OBLIGATIONS OF EC MEMBER STATES WITH RESPECT TO NATIONALS OF ALL OTHER
NON-EC WTO MEMBERS
110. The United States also argued that, since each of the EC member States is also a WTO
Member in its own right, each member State has an obligation to accord to non-EC nationals the same
advantages, favors, privileges, and immunities accorded to nationals of other EC member States. That
is, any benefits France provides to German nationals must also be provided to US nationals. By
requiring that, for instance, France accord advantages to German nati onals that it does not accord to
US nationals, the EC GI Regulation is incons istent with the MFN obligation under the TRIPS
Agreement. The GI Regulation does this, for instan ce, by requiring that France recognize and enforce
GIs that are registered by German nationals, but does not require, or even permit, France to provide
the same recognition to US GIs, since they cannot be registered under the GI Regulation in the first
place.

111. The EC's response to this argument, aside from responses already addressed in the context of
national treatment, is not clear.
89 The EC appears to be arguing that , in requiring its member States to
accord advantages to nationals of other EC member States that they do not accord to nationals of other
WTO Members, the EC itself is not according advantages to "any other country", and so the EC
member States are exempted from the MFN obligation. The EC also states that the measure at issue is
an EC measure, not a member State measure.90

112. But the EC ignores two important facts. First, in this dispute, the United States defined the
measure – the EC GI Regulation – as Regulation 2081/92 and its related implementation and
enforcement measures. 91 Therefore, any related implementation and enforcement measures –
including those of EC member States – are incl uded within the Panel's terms of reference.
Consequently, the Panel can and should review whether the measur es that EC memb er States must
take to implement and enforce the EC GI Regulation – measures that accord advantages, favors,
privileges and immunities to nationals of other EC member States – accord those same advantages,
favors, privileges, and immunities to WTO Members that are not EC member States.

113. Second, the EC cannot reasonably claim that whether an EC member State is complying with
its MFN obligations depends on whether or not it is implementing EC regulations or its own. The
only question under Article 4 of the TRIPS Agreem ent is whether the WTO Member concerned is
granting the same advantages, favors, privileges a nd immunities to other WTO Members as it grants
to its own nationals. If not, there is a viola tion of the MFN obligation, and it does not matter why or
pursuant to what requirement the WTO Member is discriminating against nationals of other WTO
Members. An EC member State cannot avoid its MFN obligations simply by claiming that it is
discriminating pursuant to an EC regulation.

89 See EC First Written Submission, paras. 252 - 256.
91 WT/DS174/20.

VI. THE EC GI REGULATION IS INCONSISTENT WITH THE MFN OBLIGATIONS
OF THE GATT 1994
114. In its first written submission, the United States argued that the EC GI Regulation was
inconsistent with Article I:1 of the GATT 1994, b ecause, in a manner similar to that presented in
Belgian Family Allowances, the GI Regulation introduces a discrimination between countries having a
given system of GI protection and having the abil ity to successfully advocate on behalf of their
nationals with respect to the registration of GIs and objections to GIs.
92 The EC's responses to this
argument are the same as those presented in connec tion with other issues described above: (1) There
is no condition of reciprocity and equivalence for WTO Members; (2) The conditions for registration
are not discriminatory; and (3) The GI Regulation has not yet been applied to products from third
countries.93

115. As the United States has already responded to these arguments above, it will not repeat those
arguments here.

116. Finally, as is the case with its response to th e national treatment claim with respect to goods,
the EC has failed to present any explanation wh atsoever of how Article XX(d) of the GATT 1994
might excuse this inconsistency with the Article 1:1 MFN obligation.

VII. THE EC GI REGULATION IS INCONS ISTENT WITH THE EC'S OBLIGATIONS
UNDER ARTICLE 16.1 OF THE TRIPS AGREEMENT
A. I
NTRODUCTION
117. As the United States has shown in its first wr itten submission and oral statement, Article 16.1
of the TRIPS Agreement requires that owners of regi stered trademarks be given the exclusive right to
prevent all third parties from using similar or identi cal signs, including geographical indications, for
identical or similar goods, where such use would result in a likelihood of confusion. 94 The United
States has also shown that the EC GI Regulation is inconsistent with this obligation because, as the
EC acknowledges,95 even if the owner of a prior valid registered trademark can prove that use of an
identical or similar registered geographical indi cation raises a likelihood of confusion, it cannot
prevent that use.

118. Specifically, as Article 14(2) of the EC GI Regulation demonstrates, even in cases where use
of a registered geographical indication gives rise to a likelihood of confusion within the meaning of
Article 16.1 of the TRIPS Agreement, the product that is marketed and labeled with that geographical
indication can be sold alongside a similar or the same product that has been marketed and labeled with
an identical or similar valid prior registered trad emark. The owner of the trademark will have no
ability to exercise its Article 16.1 rights to pr event any confusing use by the later-registered
geographical indication. As the United States has emphasized in its previous submissions to the
Panel, the "exclusive right ... to prevent" confus ing uses in Article 16.1 is critical to trademark
owners. Without this right to exclude all others from confusing uses, owning a trademark would
mean practically nothing, since the purpose and value of a trademark is to be able to distinguish one
company's goods from the goods of other companies. Without the ability to stop confusing uses, this
value is eliminated.

92 US First written Submission, paras. 127-129.
93 EC First written submission, paras. 260-264.
94 US First Written Submission, paras. 130-170; US Oral Statement, paras. 40-75.
95 EC First Written Submission, paras. 302-307; EC Responses to Questions, para. 141.

119. At this stage of the proceedings, and contrary to the EC's arguments, it should be clear that
under the US interpretation of the relevant provi sions of the TRIPS Agreement, no one form of
intellectual property right is superior to another. The EC position appears to be that a GI will always
take precedence over a trademark. By contrast, the US interpretation does not require any "hierarchy"
between trademarks and geographical indications. Rather, under the US interpretation, each TRIPS
Agreement provision is given its full scope, and both trademarks and geographical indications are
granted their respective spheres of exclusivity. Under Article 16.1 of the TRIPS Agreement, a
trademark owner is given the exclusive right to excl ude uses by all others of similar or identical signs
that are likely to confuse consumers within a give n territory. Under Article 22.2 and 22.3 of the
TRIPS Agreement, interested parties in geographical indications are granted the right to prevent the
use of signs that mislead consumers within a given territory about the origin of goods. There is no
"conflict" between these provisions. The provision s are not mutually exclusive; "simultaneous
compliance with the obligations" of these provisions is not "impossible" in any sense.96

120. The EC is simply wrong that under the US interpretation, trademarks that "lack ...
distinctiveness,"
97 or trademarks that constitute "illegitima te uses" of geographical indications, will
prevail over geographical indications. The United Stat es has made it clear that if a trademark is not
distinctive, or if it is "illegitimate" because it mi sleads consumers in a particular country about the
origin of goods, then the TRIPS Agreement and the Paris Convention provide that it should not be
registered.98 If for some reason it is registered, it is subject to invalidation.99

121. The EC is also wrong to argue that under the US interpretation, the exclusivity of trademarks
is valued over the exclusivity of geographical indications, 100 that the United States is supporting the
"superiority of trademarks over geographical indications," 101 and that, in the United States' view,
trademarks "must prevail over later geographical indications." 102 The United States accepts – and
nothing in its interpretation suggests otherwise – th at in any given case, a trademark owner bringing
an infringement claim against the user of a geogr aphical indication might not succeed on the merits.
For example, the trademark owner might not be ab le to prove that the particular use of the

96 Panel Report, Turkey – Textiles, para. 9.92. See also Panel Report, Indonesia – Autos, para. 14.28
("[I]n public international law there is a presumption against conflict," which is "especially relevant in the WTO
context since all WTO agreements ... were negotiated at the same time, by the same Members and in the same
forum." (footnotes omitted)).
97 EC First Written Statement, paras. 289, 291.
98 TRIPS Articles 22.3, 15.1; Paris Convention Article 6quinquiesB.
99 TRIPS Article 22.3; Paris Convention Article 6 quinquiesB. For this reason, the EC is wrong to
argue, at paragraph 307 of its first written submission, th at the United States is proposing "rigid application of
the first-in-time rule." As previously noted, the Unite d States is concerned in this dispute with the rights
accorded only to prior valid registered trademarks. Assuming that the trademark registration is valid, the United
States finds it curious that the EC, also in paragraph 30 7, argues that priority is not appropriate "to resolve
conflicts ... between trademarks and geographical indicati ons, because they are distinct intellectual property
rights, each with its own characteristics." See also EC Oral Statement, para. 15. The ECJ appears to disagree.
Advocate General Tizzano recently issued an opinion stating that "[le] principe de la primauté du titre antérieur
de la propriété industrielle." ("[The] principle of the priority of a preceding exclusive right ... is one of the basic
principles of trademark law and, more generally, of all intellectual property law.") The Advocate General
concluded (at paragraphs 102 and 119 of his Opinion) that the principle of priority should be applied to resolve
conflicts between trademarks and trade names and th at trade or commercial na mes, like geographical
indications, are "distinct" from trademarks. Advocate General Tizzano's Opinion in Case C-245/02,
Anheuser-Busch Inc. v. Budejovický Budvar, národní podnik , delivered 29 June 2004. Exhibit US-51 includes
official versions of the Opinion in French and Finnish, along with an unofficial English translation (from the
Finnish).
100 EC First Written Submission, paras. 271, 274; EC Responses to Questions, para. 215.

geographical indication would result in a likelihood of confusion. Or the interested party in the
geographical indication might be able to show that the trademark is subject to invalidation.

122. Under the EC GI Regulation, however, even if the owner of a prior valid registered trademark
can prove, consistent with TRIPS Article 16.1, th at use of an identical or similar registered
geographical indication confuses consumers, and even if the interested party in the geographical
indication fails to show, consistent with TRIPS Ar ticle 22.3, that the trademark misleads consumers
with respect to origin, the trademark owner still cannot prevent the continued use of that geographical
indication in a manner that results in a likelihood of confusion. The very best that the trademark
owner can hope for in this situation is the ability to continue selling produc ts with its trademark
affixed, but deprived of its ability to distinguish the goods of the trademark owner. The trademark
owner cannot exercise its right to prevent confusing use of the geographical indication.

123. This is inconsistent with Article 16.1. In United States – Section 211 , the Appellate Body
emphasized the importance of the exclusive nature of trademark rights, finding that Article 16.1
confers on the owners of "registered trademarks an internationally agreed minimum level of 'exclusive
rights' that all WTO Members must guarantee in thei r domestic legislation" – rights that "protect the
owner against infringement of the registered trademark by unauthorized third parties."
103

124. In contrast, the EC argues in this dispute that "[t]he fact that the owner of a registered
trademark cannot prevent the use of the same or a similar sign by the 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'."
104 But even the EC jurisprudence
recognizes that the core of a trademark right is the ri ght of an owner of a trademark to prevent the use
of a similar or identical sign that would result in a likelihood of confusion.105

125. The EC is correct that "co-existence" – meaning the ability of a trademark owner to do
nothing more than to continue selling products with its trademark affixed, without the Article 16.1
right to prevent infringing uses of similar or identical signs – "may not be a perfect solution to resolve
conflicts between different types of intellectual property rights."
106 More significant, however, it is a
solution that is inconsistent with Article 16.1. It presumes that the simultaneous compliance with the
obligations in Articles 16.1, 22.2 and 22.3 is impossible, and as such reads a conflict into
complementary provisions of the TRIPS Agreement where there is none.

B. A
RTICLE 14(3) OF THE EC GI REGULATION DOES NOT SATISFY THE EC'S OBLIGATIONS
UNDER ARTICLE 16.1 OF THE TRIPS AGREEMENT
126. The EC argues, in effect, that owners of regist ered trademarks in the EC or its member States
do not need the Article 16.1 right to prevent all u ses of similar or identical geographical indications
that raise a likelihood of confusion, because Artic le 14(3) of the GI Regulation "says that the
registration of a geographical indication shall be refu sed if it is likely to lead to confusion with a

103 Appellate Body Report, United States – Section 211, para. 186.
105 See, e.g., Advocate General Jacobs' Opinion in Case C-10/89, SA CNL-Sucal NV v. HAG GFAG ,
delivered 13 March 1990, [1990] ECR I-3711, para. 19 (Exhibit US-8) ("A trademark can only fulfil that role
[i.e., to identify the manufacturer and to guarantee quality] if it is exclusive. Once the proprietor is forced to
share the mark with the competitor, he loses control over the goodwill associated with the mark. The reputation
of his own goods will be harmed if the competitor sells inferior goods. From the consumers' point of view,
equally undesirable consequences will ensue, because the clarity of the signal transmitted by the trademark will
be impaired. The consumer will be confused and misled.").

trademark."107 (At other points, however, the EC argues that the TRIPS Agreement does not provide
for the exclusivity of prior valid trademarks with respect to conflicting geographical indications.108)

127. Article 14(3) provides that:

A designation of origin or geographical 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 mislead the consumer as to the true origin of the product.
128. Article 14(3) does not satisfy the EC's obligations under Article 16.1 of the TRIPS
Agreement, for at least two reasons. First, even if , for the sake of argument, this Panel were to accept
the reading of Article 14(3) offered by the EC, th e "protection" offered trademark owners is not
sufficient to satisfy Article 16.1 of the TR IPS Agreement. Article 16.1 requires that registered
trademark owners be given the right to prevent confusing uses of identical or similar signs, and not
just that government authorities be given the authority to prevent the registration of confusing signs.
Second, Article 14(3) does not permit the EC to refuse registration of all geographical indications that
raise a likelihood of confusion with any similar or iden tical trademark. As is evident from the text of
Article 14(3), it applies only with respect to a cer tain subset of valid registered trademarks –
trademarks with a certain reputation, renown, and that have been used for a certain length of time.

129. The United States addresses th ese two reasons in turn, below.

1. Even if the EC's reading of Article 14(3) of the EC GI Regulation were correct,
Article 14(3) is not a substitute for the rights accorded trademark owners under
Article 16.1 of the TRIPS Agreement
130. The EC asserts that Article 14(3) requires the EC to reject registration of a geographical
indication if the registration is likely to lead to c onfusion with a trademark. Article 16.1 requires that
the owner of a registered trademark have the exclusive right to prevent all uses of identical or similar
signs that result in a likelihood of confusion. Even if the EC's reading of Article 14(3) is accurate, it
does not satisfy Article 16.1 of the TRIPS Agreement, in two ways.

(a) TRIPS Article 16.1 addresses uses, while Article 14(3) of the EC Regulation addresses only
registration
131. Even according to the EC's reading, Article 14(3) does not afford a trademark owner the right
to ensure that no uses of a geographical indication, once re gistered, will result in a likelihood of
confusion. This is an important distinction, because a trademark owner is not necessarily able to
know, from the registration of a geographical indication alone, whether use of the registered
geographical indication will raise a likelihood of confusion. Th is is because a trademark owner
cannot know, from the registered name on its own, precisely how it will be used. For example, a
registered geographical indication may be used in ways that cannot be anticipated, such as in a
trademark-like manner or in translation, in a manner that causes a likelihood of confusion with respect
to a registered trademark. The scope of perm itted uses of a name registered as a geographical
indication may be broader than the name, as such, that is registered.

132. In an apparent attempt to diffuse this concern, the EC states that

a trademark owner may use its trademark rights in order to prevent the right holders
of a geographical indication from using confusingly any other names or other signs

108 EC Responses to Questions, paras. 200-221.

(e.g. graphic signs) in conjunction with, or in place of, the name registered as a
geographical indication. In other words, the right holders of a geographical
indication only have a positive right to use the name registered as a geographical
indication.
109
133. But this distinction is not as straightforward as the EC suggests. The United States attaches as
Exhibit US-52 four pictorial depictions of th e packaging for products sold under geographical
indications registered in the EC, and the accompanying product specifications. It should be noted that
the product specifications do not limit the way in which the geographical indications are used, and the
pictorial depictions demonstrate that the name is of ten used in a trademark-like fashion. Determining
what exactly will constitute use of "the name regist ered," therefore, is not always evident from the
name that is registered alone. To know whether "the name registered" raises a likelihood of
confusion, in many cases, a trademark owner needs to see the registered name in use.
110

134. The issue of translations also raises the ques tion of what limits are imposed on, and what is
encompassed by, use of "the name registered." Th e United States has referred to two examples. The
United States has noted three registered geographical indications set out in the Czech Republic's Act
of Accession: Budejovické pivo, Ceskobude jovické pivo and Budejovický mešt'anský var.
111 I n
trademark infringement proceedings pending before the Swedish courts, a Czech brewer has argued
that registration grants the right to use these three na mes in translation. Specifically, it asserts that the
German translation of the three registered ge ographical indications include "Budweiser Budvar,"
"Budweis," and "Budbräu." 112 The United States has also cited to the registered geographical
indication "Bayerisches Bier," which the Commission decided to register despite concerns raised
under Article 14(3) that if used in translation, it could confuse the consumer in relation to the
"Bavaria" trademark in Holland. 113 ("Bayer," the root of "Bayerisch es," is translated into English as
"Bavaria" – the suffix "isches" is the adjective form of "bayer".)

135. The text of Article 16.1 is clear – the owner of a registered trademark must be granted the
right to prevent uses of similar or identical signs that raise a likelihood of confusion. The practical
reason behind this requirement is equally clear from the examples cited above – in many cases, unless
or until the registered geographical identification is actually used, neither the EC authorities nor the
trademark owner will always know whether there is a likelihood of confusion. Even accepting the
EC's reading of Article 14(3) on its face, the tr ademark owner is not afforded the right guaranteed
under Article 16.1

(b) TRIPS Article 16.1 grants rights to trademark owners , while Article 14(3) of the EC
Regulation empowers the EC authorities
136. Even under the EC's reading, Article 14(3) does not provide the trademark owner with the
right to prevent confusing uses, as is required by Article 16.1 of the TRIPS Agreement. According to
the EC, it merely requires the EC authorities to decline registration of a geographical indication in

109 EC Responses to Questions, para. 142 (emphasis added).
110 This is not to say, however, that a geographical indication cannot be found confusingly similar to a
prior valid trademark at the time of registration, for in stance, in cases where both the signs and the goods are
identical. In such cases, Article 16.1 of the TRIPS Agreement requires that the likelihood of confusion be
presumed. However, not all confusing uses can be forese en at the time of registration; therefore, the trademark
owner must be provided the right to prevent confusing uses in the market as they arise.
111 Exhibit COMP-3.c (Annex II, para. 18).
112 Copies of the Czech brewer's brief to the Swedish court, in Swedish and as unofficially translated to
English, are included in Exhibit US-53. The relevant passage is at paragraphs 4-6 of Section 3.2 The EC has
not indicated in these proceedings, or in the Swedish domestic court pro ceedings discussed above, whether use
of a registered GI in translation constitutes a permitted use of that GI.
113 US Oral Statement, para. 55.

some circumstances. The trademark owner does not control this process – a factor critical to an
owner's Article 16.1 rights. As stated in the prea mble to the TRIPS Agreement, "intellectual property
rights are private rights," and control over them by private owners is crucial.

137. The EC suggests that the trademark owner has two ways of asserting its Article 16.1 rights in
the registration process. First, the EC refers to the "right" of a trademark owner to object to the
registration of a geographical indication, pursuant to Article 7(4) of the EC GI Regulation.
114 This so-
called "right" is insufficient to implement the Artic le 16.1 obligations. The United States has shown
that, in fact, US nationals do not enjoy the "right" to object to registration of a geographical indication
on a non-discriminatory basis. Moreover, even if they did, it is apparently the EC's own view that the
right of objection is not part of the Article 16.1 right to prevent confusing uses. 115 In addition, as the
United States noted in its responses to questions, nearly 80 percent of the geographical indications
registered in the EC to date, including, most recently, names registered via accession protocols, were
exempt from the objection procedures included in the EC GI Regulation. 116 In these circumstances,
trademark owners will find no comfort in the EC's assertion of the "right" of objection as a sufficient
substitute for Article 16.1 rights.

138. Second, the EC notes that if a trademark owne r considers that the Commission has registered
a geographical indication that raises a likeli hood of confusion, the owner can challenge the
Commission's failure properly to apply Article 14(3) before the "courts."
117 The United States
presumes that the EC is referring to a challenge to th e validity of a registration before the EU courts.
Under Article 230 of the EC Treaty, 118 a natural or legal person that is "directly and individually
concerned" by a registration can challenge the valid ity of the registration before the Court of First
Instance ("CFI"), with an appeal to the European Court of Justice ("ECJ"). 119 The very important
qualification, however, is that under Article 230, the case must be brought within two months of
publication of the registration.120

139. But actual confusing uses may not become a pparent within two months, and Article 16.1
permits no such "expiration" of the Article 16.1 ri ghts. Indeed, aware of this two-month window, a
potential user of a registered geographical i ndication would be well-advised to preserve the
registration from challenge by waiting until the two-m onth period has tolled to begin particular uses
of the geographical indication that would arguably raise a likelihood of confusion with respect to a
registered trademark.

140. At that stage, after the two-month period has expired, the trademark owner's only option
would be to bring an infringement challenge agai nst confusing use of the identical or similar

114 The EC states that a statement of objection "shall" be admissible if it demonstrates that "'the
registration of the name proposed would jeopardize the existence of a mark.'" EC Responses to Questions,
para. 160, quoting the EC GI Regulation, Article 7(4).
115 EC First Written Submission, paras. 326 ("Article 16.1 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 another intellectual property right, whether it is a trademark or a different right
such as geographical indication."), and 427 ("[T]he EC considers that the right to formulate objections to the
registration of another intellectual property rights is not inherent in the exclusive rights conferred to trademark
rights holders by Article 16.1.").
117 EC Responses to Questions, paras. 153, 181.
118 Exhibit US-26.
119 The concept of "directly and indi vidually concerned" is narrowly applied, as confirmed recently by
the ECJ in C-50/00, Union de Pequenos Agricultores v Council (25 July 2002). Exhibit US-54.
120 This deadline has been enforced strictly. See, e.g., Case T-85/97, Horeca-Wallonie v. Commission,
order of 20 November 1997 (Exhibit US-55); Case T-12/90, Bayer AG v. Commission, Case C-195/91 P, Bayer
A.G. v Commission [1994] ECR 1-5619 (Exhibit US-56).

geographical indication.
121 But as the EC has confirmed, 122 even if the owner of a prior valid
registered trademark can prove that use of an identical or similar geographical indication raises a
likelihood of confusion, it will not be able to prevent use of the geographical indication. The most the
trademark owner can hope for is the continued abilit y to sell products with its trademark affixed,
without the ability to prevent confusing use of the geographical indication.

141. For all of these reasons, the ability to challenge the registration of a geographical indication is
no substitute for Article 16.1 rights. Article 16.1 of the TRIPS Agreement grants rights to trademark
owners to prevent particular uses of identical or similar signs, and imposes no two-month time limit
on the exercise of that right. For as long as the trademark is valid and registered, Article 16.1 grants
the owner the right to prevent uses of identical or similar signs that raise a likelihood of confusion.

2. Article 14(3) of the EC GI Regulation neither requires nor permits the EC authorities to
deny registration of all confusing geographical indications.
142. The EC asserts that 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."
123 But Article 14(3) does not say this.
It says that a geographical 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 mislead the
consumer as to the true origin of the product."

143. Setting aside the point made above that TR IPS Article 16.1 accords trademark owners the
right to prevent uses of identical or similar geographical indications, and not only registration of such
geographical indications, it is clear that Article 14( 3) applies criteria that are different from and more
restrictive than Article 16.1. Article 16.1 rights are not reserved solely to registered trademarks of a
certain reputation or particular renown. Nor is there any require ment under Article 16.1 that the
trademark be used for any length of time. Article 16.1 articulates a right that is owed under the
TRIPS Agreement to the owner of any valid registered trademark.

144. Had the EC wished to adopt a provision that "says that the registration of a geographical
indication shall be refused if it is likely to lead to confusion with a trademark," it could have done so.
According to the EC, "at the time that Regulati on 2081/92 was adopted, the TRIPS Agreement was in
the final phases of its negotiation," and the EC's " objective" was to track what would become its
TRIPS obligations in the Regulation.
124 Why, in those circumstances, did the EC not simply include
the Article 16.1 "likelihood of confusion" language in Article 14(3) of Regulation 2081/92? Why,
instead, did it include language in Article 14(3) about a trademark's "reputation and renown and the

121 The United States will later in this submission rebut assertions by the EC (EC Responses to
Questions, para. 31) that the interpretation of Article 14(3) it offers to the Panel is the same interpretation that it
has adopted and will continue to support in proceedings befo re the ECJ. At this point, the United States merely
observes that once the two-month period to challenge the validity of the geographical indication registration
expires, the Commission will no longer be there, and its allegedly helpful interpretation of Article 14(3) will no
longer be relevant, to help trademar k owners as they turn to national courts to resolve infringement claims
regarding confusing uses of the registered geographical indications.
122 EC First Written Submission, paras. 302-307; EC Responses to Questions, para. 141.
123 EC Responses to Questions, para. 155. The EC has alternatively asserted that Article 14(3) merely
"allows the registering authorities to refuse the registration of any confusing geographical indications," and that
under Article 14(3) it is " possible to reject" an application for registration of a geographical indication that
jeopardizes the existence of a mark. EC First Written Submission, para. 286 (emphasis added); EC Responses
to Panel Questions, para. 160 (emphasis added). As discussed above, neither of these positions is correct. But
the United States would note that Article 14(3) is an even poorer substitute for Article 16.1 rights if it permits
the registration of confusing GIs.
124 EC Responses to Panel Questions, para. 12.

length of time it has been used" – language that is not found in Article 16.1 and that is plainly more
restrictive than the Article 16.1 standard?

145. The obvious answer is that the EC has limit ed the circumstances in which a geographical
indication will be denied registration to those instances in which a trademark's "reputation and renown
and the length of time it has been used" make th e geographical indication "liable to mislead the
consumer as to the true identity of the product."
125 These criteria – "reputation and renown and the
length of time ... used" – cannot be threshold prerequisites that the owner of a prior valid registered
trademark must invoke to prevent confusing uses by identical or similar signs. Even assuming that
Article 16.1 can be entirely fulfilled by denying re gistration of confusing geographical indications,
Article 14(3) of the GI Regulation makes the availa bility of those rights contingent on the trademark
possessing "reputation and renown and ... use[]." TRI PS Article 16.1, however, requires only that the
trademark be validly registered for the owner to avail itself of its rights.

146. Article 14(3)'s "reputation and renown" language limits the applicability of the provision to a
certain class of trademarks, whereas TRIPS Article 16.1 places no limits on the class of registered
trademarks that are granted the exclusive right to exclude others. In fact, the threshold prerequisites
of reputation, renown, and length of time used are factors generally used to determine the scope of
protection to give to "well-known" or "famous" trademarks, under Article 6 bis of the Paris
Convention, and Articles 16.2 and 16.3 of the TRIPS Agreement. Article 16.2 refers specifically to
criteria such as "knowledge of the trademark" and knowledge "obtained as a result of the promotion
of the trademark." The word "knowledge" in Ar ticle 16.2 means, among other things, "familiarity
gained by experience."
126 The "familiarity" part of this definition would appear to encompass the
"reputation and renown" criteria of Article 14(3), wh ile "gained by experience" tracks the "length of
time ... used" criterion in Article 14(3).

147. The threshold prerequisites included in Article 14(3) – "reputation and renown and the length
of time ... used" – also track the factors for dete rmining whether a trademark is well-known that are
recorded in Article 2(1)(b) of the Joint Recommendation Concerning Provisions on the Protection of
Well-Known Marks, adopted by the Paris Union Assembly and the WIPO General Assembly.
127
Among the factors to be considered are the "degr ee of knowledge or recognition" of the mark, the
"duration" of any "use" of the mark, and the "duration" of any registrations of the mark. These factors
correspond to the prerequisites included in Article 14(3) of the GI Regulation The repeated references
in the WIPO Joint Recommendation to the "duration" of "use" or of "registrations" corresponds to the

125 The EC states that since "it would be impossible to evaluate the likelihood of confusion on the basis
of only" the two criteria listed in Artic le 14(3), the Commission must be able to consider other criteria relevant
to a determination of likelihood of confusion. See EC Responses to Panel Questions, para. 156. The more
logical implication, however, contrary to the EC's statement, is that Article 14(3) does not embody the
"likelihood of confusion" standard, at least with respect to all but a certain category of marks. Moreover, the EC
cites to the "Bayerisches Bier" exam ple - in which the EC decided to register "Bayerisches Bier" as a
geographical indication, despite objections from the owner of the trademark BAVARIA that the registration
would raise a likelihood of confusion - as "consistent w ith" the interpretation of Article 14(3) offered in this
dispute. EC Responses to Questions, para. 170. S ee also EC First Written Submission, para. 288 (footnote
140). But this decision does not, in fact, confirm the EC's interpretation of Article 14(3) for the purposes of this
dispute. The Council's decision (provided as Exhibit EC-9) does not say that the Council took into account
factors other than the reputation, renown and length of use of the trademark in reaching its decision to register
the geographical indication. All it says is that "[i]n view of the facts and information available, it was ...
considered that registration of the name ... was not liable to mislead the consumer as to the true identity of the
product." This does not in any way confirm that the EC 's interpretation of Article 14(3) is that applied in
practice.
126 New Shorter Oxford English Dictionary (Fourth Ed. 1993), pg. 1503. Exhibit US-57.
127 Exhibit US-58.

"length of time ... used" prerequisites in Article 14( 3). Similarly, the refe rence to the "degree of
knowledge or recognition" corresponds to the "reputation and renown" prerequisites in Article 14(3).

148. As further evidence of the meaning of Article 14(3), in the process of bringing its laws into
conformity with the EC GI Regulation upon accession to the EU earlier this year, Hungary adopted
amendments to its Law on the Protection of Trademarks and Geographical Indications that
demonstrate its understanding that Article 14(3) tracks the factors for determining whether a
trademark is well-known. In particular, Section 45(1)(c) of the amended Hungarian law reads as
follows:

a geographical indicator identical with or similar to a previous trademark if, with
regard to the awareness, reputation or duration of the presence of the trademark in the
market, the use thereof may r esult in the misleading of consumers in respect of the
origin of the goods,

shall be excluded from protection.
128
The statement of ministerial reasoning accompanying Section 45 provides as follows:

The rule on the protection of a prior well-known mark corresponds to the relative
ground for refusal contained in Section 14(3) of EC Regulation 2081/92 on the
protection of geographical indications and designations or origin for agricultural
products and foodstuffs.
129
149. Thus, Hungary, an EC member State that – presumably in consultation and negotiation with
the EC – recently amended its law to make it consistent with the GI Regulation, also considers that
the prerequisites in Article 14(3) block the registra tion of a geographical indication that is confusing
only with respect to an identical or similar well-known trademark.130 Article 14(3) does not extend the
"likelihood of confusion" standard from TRIPS Article 16.1 to all valid registered trademarks; rather,
it considers only a certain subset of trademarks that appear to correspond to the definition of
well-known marks.

150. Finally, insight into the meaning of the prer equisites included in Artic le 14(3) can be drawn
from use of those criteria in EC law and jurisprude nce. "Reputation," one of the prerequisites in
Article 14(3), is required by the EC Trademar k Regulation and Trademark Directive to secure
heightened protection against uses of c onfusing identical or similar signs on dissimilar goods.
131 The

128 An English language version of Section 45 is provided as Exhibit US-59. An English language
version of the predecessor to Section 45 (Section 10 6), before amendments aimed at implementing EC
Regulation 2081/92 were adopted, is pr ovided separately, as Exhibit US-60. The predecessor to section 45
(section 106) appears to have been consistent with Article 16.1 of the TRIPS Agreement.
129 Emphasis added. An English language versi on of the ministerial reasoning accompanying the
amendments is included as Exhibit US-61.
130 This evidence also demonstrates that contrary to the EC's response to question 70 from the Panel
(paras. 172-174), the EC member States do not agree with the Commission's submission to the Panel that the
terms of Article 14(3) are sufficient to prevent the registration of all confusing GIs.
131 See Council Regulation (EC) No 40/94 of 20 D ecember 1993 on the Comm unity trade mark, as
amended, Articles 8(5), 9(1)(c) (Exhibit COMP-7.a); First Council Directive of 21 December 1988 to
approximate the laws of the Member States relating to trade marks (89/104/EEC), as amended, Articles 4(3),
4(4)(a), 5(2) (Exhibit COMP-6.a). Similarly, Article 14 (3) of the EC GI Regulation is not limited to the denial
of registration for a geographical indication proposed for use on products similar to those associated with a

requirements for a trademark to be considered as ha ving a "reputation" were set out by the ECJ in
Chevy.132 In Chevy, the ECJ held that "reputation" requires that the trademark satisfy a knowledge
threshold requirement , or in other words that it enjoy a certain degree of knowledge amongst the
public.133 The Court stated that the degree of knowledge must be considered to be reached when the
trademark is known by a significant part of the public concerned. 134 In examining whether this
condition is fulfilled, the Court stated that a nationa l court must take into ac count, in particular, the
market share held by the trademark, the intensity, geographical extent and duration of its use, and the
size of the investment made by the undertaking promoting it.135

151. The "duration of use" required to qualify for status as a trademark of "reputation" under the
ECJ's test in Chevy is particularly relevant to Article 14(3), which also requires that to secure refusal
of registration of a confusing geographical indica tion, a trademark must have been "used" for some
"length of time."

152. Although it undertakes a case-by-case analysis, th e Office for Harmonization in the Internal
Market (Trade Marks and Designs) ("OHIM") has found that use of a trademark in the market for 45
years (HOLLYWOOD)
136, 50 years (PLANETA) 137 or more than 100 years (OLYMPIC) 138 offers a
strong indication of reputation. Further guidance on the prerequisite of "length of time ... used" in
Article 14(3) can be derived from the EC Wine Regulation. 139 The Wine Regulation contains a
grandfathering clause for well-known trademarks. 140 The holder of a well-known registered brand
name for a wine may continue to use that brand name if the brand name was registered at least 25
years before the official recognition of the geographi cal name and has been used without interruption.
At the very least, these sources indicate that th e prerequisite of "length of time ... used" in
Article 14(3) of EC Regulation 2081/92 requires uni nterrupted use for a considerable number of
years.

153. Thus, even assuming that Article 16.1 can be fulfilled by denying registration of confusing
geographical indications, Article 14(3) of the EC GI Regulation, by requiring that the trademark
possess "reputation and renown" and "l ength of time ... used," requires considerably more than that
the trademark be validly registered for the owner to avail itself of TRIPS Article 16.1 rights.

154. This is inconsistent with Article 16.1 of the TRIPS Agreement. Article 16.1 accords rights to
all registered trademarks, regardless whether they have acquired a "reput ation and renown," and
regardless whether they have been "used" for any "length of time" whatsoever. Therefore – and
setting aside the critical point that TRIPS Article 16.1 accords trademark owners the right to prevent
uses of identical or similar geogra phical indications, and not only registration of those signs –
Article 14(3) is insufficient to satisfy the EC's obligations under Article 16.1.

155. It is also important to note that – like th e EC's novel reading of Article 12(1) of its GI
Regulation – these proceedings mark the first time in which the EC has asserted that Article 14(3)

trademark of reputation, renown and some length of use. Article 14(1) of Regulation 2081/92, for example,
includes such a limitation, but Article 14(3) does not. Exhibit COMP-1.b.
132 Case C-375/97, General Motors Corp. v. Yplon SA ("Chevy"), judgment of 14 September 1999.
Exhibit US-62.
133 Id., para. 22.
134 Id., para. 26.
135 Id., para. 27.
136 OHIM Resolution 105/1999 (available in French only), pgs. 4-5. Exhibit US-63.
137 OHIM Resolution 2/2000 (available in Spanish only), pg. 11. Exhibit US-64.
138 OHIM Resolution 81/2000, pg. 8. Exhibit US-65.
139 Council Regulation No. (EC) 1493/1999 of 17 May 1999 on the common organisation of the market
in wine. See Annexes VII(F)(2) and VIII(H)(2) thereto, in connection with Article 47(2)(e). Exhibit US-66.
140 In Annexes VII(F)(2) and VIII(H)(2) thereto, in connection with Article 47(2)(e).

"says that the registration of a geographical indicati on shall be refused if it is likely to lead to
confusion" with any registered trademark, and not just trademarks that hold reputation and renown
and have been used for some length of time.
141 As recently as March 2004, in a "Guide to
Community Regulations," the Commission explained Article 14(3) in the following terms:

As a general rule, under the EU regime, th e registration of a conflicting trademark
does not prevent registration of the geographical name. Only in one circumstance ,
referred to in Article 14.3, is the appli cation to register the geographical name
refused. This is if, in the light of th e trademark's reputation and renown and the
length of time it has been used, registration of a geographical name would be liable to
mislead the consumer as to the true identity of the product. In all other cases , the
name can be registered notwithstanding the existence of the registered trademark.
142
156. The United States has added italicized emphasis to demonstrate that outside the context of
these proceedings, the Commission considers that Article 14(3) does not "say[] that the registration of
a geographical indication shall be refused if it is lik ely to lead to confusion" with any registered
trademark.143 Instead, the Commission considers that Article 14(3) will apply and the registration
denied "[o]nly in one circumstance" – where th ere is a trademark that possesses the requisite
reputation and renown and length of time used. In contrast, "[i]n all other cases," the registration will
be granted, "notwithstanding the existence of the registered trademark."

157. Outside of these proceedings, therefore, th e Commission's guidance on the EC GI Regulation
is that the general rule ("all other cases" apart from "one circumstance") involving "the existence of
the registered trademark" – i.e., all cases not involving a registered trademark that possesses the
requisite reputation and renown and length of time used – is that Article 14(3) will not apply, and that
the registration will be approved "n otwithstanding" the registered trademark. Thus, although the EC
here argues that "[i]t is not conceivable 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,"
144 it appears that the Commission has itself already adopted one interpretation or
application of Article 14(3) before the Panel, and a different interpretation or application (one that has
the merit of being consistent with the text of Article 14(3)) when not before the Panel.

158. Nor is this dispute unique in that rega rd. As discussed above in section II, in the Petrotub
case at the ECJ, the Commission's assertions to the ECJ concerning the requirements of EC law
directly contradicted the assurances it had given WTO Member s the year before. Further, as
discussed above, when the appellants sought to rely on those assurances at the ECJ, the Commission
opposed the request, deeming them "irrelevant".
145

159. In the light of what it termed the "irrele vant" assurances given to WTO Members, and the
attempt to exclude the assurances from EC court pr oceedings, the Commission's assurances to this
Panel on the meaning of Article 14(3) of the EC GI Regulation hardly inspire confidence. The text of

142 Guide to Community Regulations, "Protection of Geographical Indications, Designations of Origin
and Certificates of Specifi c Character for Agricultural Products and Foodstuffs" (Working Document of the
Commission Services issued by the European Commissi on Directorate-General for Agriculture, March 2004),
pg. 23 (emphasis added). Exhibit US-24.
143 EC Responses to Questions, para. 155 (emphasis added).
145 Case 76/00 P. Petrotub, judgment of 9 January 2003, para 15 (Exhibit EC-17).

Article 14(3) speaks for itself, and, in the absence of specific convincing legal authority to the
contrary, that is the reading the Panel should adopt for the purposes of this dispute.146

160. The EC also argues that unless Article 14(3) of the EC GI Regulation is interpreted to require
the EC to refuse registration of any geographical in dication that raises a likelihood of confusion with
respect to an identical or similar trademark, Article 7(4) of the Regulation would be rendered
"pointless."
147 Article 7(4) provides that "[a] statement of objection shall be admissible only if it ...
shows that the registration of the name proposed would jeopardize the existence of ... a mark ..."
According to the EC, unless Article 14(3) is read to encompass the likelihood of confusion standard,
the Regulation would admit an obj ection on grounds that could not ultimately serve as the basis to
refuse registration.

161. To begin, as the EC notes, Article 7(4) a ddresses what a trademark owner must establish to
have its objection admitted. However, even if Ar ticle 14(3) were to be interpreted in light of
Article 7(4), as the EC seems to suggest, the tw o provisions would still have to be interpreted
cumulatively. Thus, the standard in Article 14(3) (requiri ng rejection of proposed registrations that
are "liable to mislead" with respect to a well- known mark) would be interpreted in light of the
admissibility standard in Article 7(4) (allowing ad missibility of objections to proposed registrations
that would "jeopardize the existence" of a mark). In the EC's view, together these two standards
would "encompass[] any instance of likelihood of confusion ..."
148 But to apply this combined
Article 7(4)/Article 14(3) standard to all trademarks, as opposed to only those trademarks with
"reputation and renown" and "use" for some "length of time," would not amount to a cumulative
interpretation of Articles 7(4) and 14(3). Rather, it would read the phrase "reputation and renown and
the length of time used" limitation out of Article 14(3) altogether. For the Panel to accept such a
reading would not amount to an "objective assessme nt of the facts of the case," as is required by
Article 11 of the DSU.149

162. Finally, the EC suggests that where the EC member States have been unable to agree on
whether to register a geographical indication that h as been the subject of an objection by a trademark
owner, Article 7(5)(b) of the EC GI Regulation overrides Article 14(3), and calls on the Commission
"to adopt a decision having regard to the 'likeli hood of confusion' between the proposed geographical
indication and any other marks."150 This argument should be rejected, for two reasons.

163. First, and as noted above with respect to Ar ticle 7(4), even under the EC's construction,
Article 7(5)(b) applies cumulatively with Article 14(3) . Thus, even if Article 7(5)(b) means that in
some instances, the standard in Article 14(3) ("liable to mislead") would be interpreted in light of the
standard in Article 7(5)b ("likeli hood of confusion"), the combined standard would not apply for all
trademarks. It would only apply with respect to those trademarks with "reputation and renown" and
"use." Thus, it would not satisfy TRIPS Article 16.1, which extends protection to all trademarks.

164. Second, even if the EC's interpretation rega rding the interaction between Articles 7(5)(b) and
14(3) is correct, Article 7(5)(b), by its own terms, applies only in those situations in which the EC

146 For example, the panel in US - Section 301 accorded particular credibility to the interpretation given
by the United States to its law because that interpre tation was reflected in an authoritative statement of
administrative action ("SAA"), issued by the President prior to the dispute, and approved by the US Congress.
See US Responses to Questions, para. 4, citing Panel Report, US - Section 301 Trade Act , paras. 7.111 and
7.112.
148 EC Responses to Panel Questions, para. 169. Th e EC simply answers that the "liable to mislead"
standard and the "jeopardize the existence" standard "encompass[] any instance of likelihood of confusion."
149 See US Responses to Questions, para. 1.

member States are unable to agree. In all other situations, Article 14(3), which provides for the
refusal of registration only where a trademark meet s the criteria of reputation, renown and length of
time used, would apply alone.

165. For all of these reasons, the Panel should rej ect the EC's assertion that the owners of prior
valid registered trademarks do not need the rights guaranteed by Article 16.1 of the TRIPS
Agreement, since Article 14(3) of the GI Regula tion "says that the registration of a geographical
indication shall be refused if it is likely to lead to confusion with a trademark."
151 E v e n i f
Article 14(3) could be interpreted in this way, as noted earlier, it would be insufficient to satisfy the
terms of TRIPS Article 16.1, which grants to trademark owners the right to prevent uses of confusing
identical or similar geographical indications. In an y event, the interpretation of Article 14(3) offered
by the EC in these proceedings is not supported by th e text of the provision, and is irreconcilable with
the interpretation of the provision offered by the EC outside the bounds of this dispute. Article 14(3)
merely empowers the EC authorities to refuse regi stration of a geographical indication that, on its
face, is misleading with respect to trademarks that enjoy reputation, renown and use.

166. Thus, Article 14(3) will not stop registration of all geographical indications that may be used
in a confusing manner with respect to identical or similar valid registered trademarks. And use of
those confusing geographical indica tions that are registered is immune from the reach of TRIPS
Article 16.1. By virtue of the EC GI Regulation, even if the owner of a prior valid registered
trademark can prove that use of an identical or similar geographical indication that has been registered
raises a likelihood of confusion, it cannot prevent c ontinued use of that geographical indication in a
manner that results in a likelihood of confusion. This is inconsistent with the obligations of
Article 16.1 of the TRIPS Agreement.

C. T
HE EC'S ASSERTION THAT FEW TRADEMARKS THAT CONTAIN OR CONSIST OF A
GEOGRAPHICAL INDICATION ARE REGISTRABLE IS INCORRECT AND IRRELEVANT
167. In its first written submission and its responses to the Panel's questions, the EC asserts that
few trademarks that contain or consist of a geogr aphical indication will be distinctive and therefore
registrable. According to the EC, it will therefor e only be the rare occasion in which a conflict would
arise between a valid registered trademark and a registered geographical indication. 152 As the United
States noted in its oral statement, 153 the United States is concerned with those trademarks that contain
or consist of a geographical indication that are in fact registrable and validly registered, however few
their number. The owners of those trademarks must be accorded their Article 16.1 rights.

168. Moreover, the United States does not concede that the number of trademarks containing or
consisting of a geographical indication that are registrable is necessarily small. First, under
Article 2(3) of the EC GI Regulation, non-geogr aphical names are subject to registration as
geographical indications. Even if the EC believe s that a trademark contai ning or consisting of a
geographical name would not qualify as distinctive, it presumably cannot easily extend that argument
to trademarks that contain or consist of a non-geographic name.

169. Second, it is simply untrue that valid re gistered trademarks cannot incorporate certain
"geographical" elements. The United States has cited to the hypothetical example of a trademark for
LUNA, in connection with cheese, and potential regi stration of a geographical indication for use on
cheese produced in Luna, Spain.
154 The United States has also cited to the example of FARO, a

152 EC First Written Submission, paras. 275, 278-285; EC Responses to Questions, para. 176.
153 US Oral Statement, para. 49.
154 US Oral Statement, para. 50.

registered Community trademark for coffee and t ea, and potential registration of a geographical
indication for use on coffee produced in Faro, Portugal.155

170. Thus, valid registered trademarks containing or consisting of a geographical indication exist,
and there is no evidence whatsoever that they ar e few in number. Even if the number of such
trademarks were small, however, the owners of all valid registered trademarks must be granted their
TRIPS Article 16.1 rights. Under the EC GI Regulation, by contrast, the very best these trademark
owners can hope for is the ability to continue sellin g products with their trademarks affixed. The
trademark owners cannot exercise the right to prevent uses of identical or similar geographical
indications, even if those uses confuse consumers.

D. A
RTICLE 24.5 OF THE TRIPS AGREEMENT IS NOT AN EXCEPTIO N TO THE RIGHTS ACCORDED
TO TRADEMARKS
171. As a defense against the cl aim that the GI Regulation is inconsistent with the EC's
Article 16.1 obligations, the EC asserts that Article 24.5 of the TRIPS Agreement specifically allows
for the type of "co-existence" of GIs and trademarks established by the GI Regulation. 156 The United
States has demonstrated that the EC's interpretation is incorrect for multiple reasons, among them that
Article 24.5 is a clearly-labeled exception to the oblig ation to protect GIs in Part II, Section 3 of the
TRIPS Agreement. 157 An "exception" excepts or "exempts" something from the "scope of a
proposition", which in this case is the scope of protection accorded to geographical indications. 158
The Appellate Body has interpreted provisions based on similar considerations of their place in the
overall structure of the covered agreement at issue, including consideration of the headings or titles of
sections.159

172. Accordingly, Article 24.5 provides an exception to the protection of GIs that shields certain
trademarks; it is not an exception to the trad emark obligations under Ar ticle 16.1 of the TRIPS
Agreement. The EC acknowledges that "Article 24.5 is not an 'exception' to Article 16.1"
160, but
nevertheless advocates an interpretation of Article 24.5 that places it in that position. The EC's
reasoning attempts to transform a provision that protects certain grandfathered trademarks into a
provision that empowers it to prejudice trademarks.

173. Because the EC is attempting to use Article 24. 5 as an affirmative defense to the violation of
Article 16.1 by the GI Regulation, the EC bears the burden of proof on this issue.
161 This follows
from the Appellate Body's guidance in Japan-Apples that "although the complaining party bears the
burden of proving its case, the responding party must prove the case it seeks to make in response." 162
Despite the EC's implication to the contrary, 163 the fact that the United States referred to Article 24.5
in its panel request does not change this burden, especially since the United States has made clear
through its first written submission that it is not necessary for the Panel to even consider Article 24.5
to find a violation of Article 16.1, as Article 24.5 is an exception to GI protection, not trademark

156 EC First Written Submission, paras. 294-309; EC Response to Panel Question 76.
157 US Oral Statement, paras. 57-58; US Response to Panel Question 78.
158 See US Response to Panel Question 78, at para. 59, citing New Shorter Oxford English Dictionary
(Fourth Ed. 1993), p. 872.
159 See Appellate Body Report, Canada - Dairy , para. 134 ("A strong presumption arises that the
language which is inscribed in a Member's Schedule under the heading, 'Other terms and Conditions', has some
qualifying or limiting effect on the substantive content or scop e of the concession or commitment."); US
Responses to Panel Question 78, paras. 111-112.
160 EC Response to Panel Question 75, para. 197.
161 See US Response to Panel Question 75, paras. 91-92.
162 Para. 154.
163 EC Response to Panel Question 75, para. 198.

protection.
164 Nevertheless, in light of the EC's reliance on Article 24.5 as a defense to the claim that
the EC GI Regulation is inconsistent with Artic le 16.1, the United States has provided a detailed
interpretation of Article 24.5 consis tent with the international customary rules of treaty interpretation,
considering the ordinary meaning of the provision, its context, and the object and purpose of the
Agreement.165 This analysis demonstrates that the stat ement in Article 24.5 that Members shall not
implement the GI section in a manner that "prejudice[s] ... the validity of the registration of a
trademark" requires that owners of grandfathere d trademarks continue to be accorded their
Article 16.1 rights to prevent all others, including GI right holders, from confusing uses. 166
Specifically, the ordinary meaning of "validity of the registration of a trademark" refers to the
possession of legal authority accorded by virtue of th e entrance of a trademark in a register. As the
legal authority accorded by trademark registration is defined in Article 16.1, it follows that the
validity of a trademark registration will be "preju diced" or damaged if a Member fails to allow the
trademark owner to prevent all others from confusing uses.

174. Moreover, Article 15.1 of the TRIPS Agreemen t clarifies that if a sign is not capable of
"distinguishing the goods or services of one undertak ing from those of other undertakings" – either
inherently or through use – then it cannot constitute or function as a tr ademark, as it is not considered
"protectable subject matter". The denial of th e right to prevent confusing uses of the trademark
prejudices the ability to establish and maintain the trademark's ability to distinguish goods of one
enterprise from those of another and thereby prejud ices its capability of "constituting a trademark."
167
This is another way in which depriving a trademar k owner of his right to prevent confusing uses of
similar or identical signs would prejudice the "validity of the registration of a trademark."

175. Indeed, the EC adopted this very view wh en it argued that the grounds for determining the
admissibility of objections to a GI registration under Article 7(4) of the GI Regulation – that it would
"jeopardize the existence ... of a mark" – "enc ompasses any instance of likelihood of confusion
between the proposed geographical indication and an earlier trademark".
168 If, according to the EC,
allowing confusing uses would "jeopardize the existe nce ... of a mark", then allowing confusing uses,
contrary to Article 16.1 of the TRIPS Agreement, wo uld also appear to "prejudice ... the validity of
the registration of a trademark" under Article 24.5. 169

176. The United States has also explained that th e additional prohibition against "prejudice ... [of]
the right to use a trademark" refers to the harm or damage to the permitted or forbidden activity

164 See, e.g., US First Written Submission, para. 142.
165 US Oral Statement, paras. 57-67; US Response to Panel Question 76.
166 US Response to Panel Question 76, paras. 97-99.
167 For example, when considering the case of the "SL" trademark owned by Mercedes-Benz, and the
concurrent use by Fiat of that same sign, the German Federal Supreme Court stated that concurrent use by others
of Mercedes' "SL" mark could put at risk the very existence of Mercedes' SL mark. Federal Supreme Court
(Bundesgerichtshot), Decision 06.12.1990 – Case No. 1 ZR 297/88 ("SL"), published in IIC 1992 Heft 02, 286.
("Of more importance is, however, anot her aspect, which may determine not merely the reputation, but also the
very existence of the plaintiff's trad emark... [I]t could be expected that other vehicle manufacturers might soon
follow the defendant's example [of concurrently using the trademark without permission]... . [A]s a result, ... the
mark SL would not merely be impaired but its essential function as the distinctive sign of the goods would be
threatened, and in the long term its very existence would be at risk.") Exhibit US-67.
168 EC Response to Panel Question 68, para. 160.
169 If a trademark is deemed invalid, and removed from a register in jurisdictions in which ownership is
determined by registration, it can be said that it no longer exists, in particular in the ability of its owner to
exclude all third parties from using it. Moreover, "prejudice" and "jeopardize" have virtually identical
meanings. The definition of "prejudice" is "injury, damage, harm" (New Shorter Oxford English Dictionary
(Fourth Ed. 1993), p. 2333.), while the definition of "jeopardize" is "put into jeopardy, endanger, put at risk",
and "jeopardy" refers to "risk of loss, harm" ( New Shorter Oxford English Dictionary (Fourth Ed. 1993), p.
1444.) Exhibit US-68.

associated with the application of a trademark to its purpose. 170 Based on the context of Articles 15.1
and 16.1 of the TRIPS Agreement, the purpose of a tr ademark is to allow its owner to distinguish the
owner's goods from the goods of others, which requires that trademarks accord their owners the right
to prevent all others from uses that would cause a likelihood of confusion. 171 Thus, the "right to use"
the trademark for its purposes encompasses the right to exclude others from using the trademark.

177. The EC would convert an additional restriction on measures to implement the GI section of
the TRIPS Agreement – that the GI not prej udice the right to use a trademark – into a reduction in the
protection of trademarks. For the EC, Article 24.5 means that the measures can prejudice the basic
right of the trademark owner to prevent confusing u ses of similar or identical signs that result in a
likelihood of confusion with respect to the trademar k. There is simply nothing in Article 24.5 that
would support such a conclusion.

178. Even if one were to resort to the negotiating history (and under the customary rules of
interpretation reflected in the Vienna Convention , one would not normally have recourse to
negotiating history), as the United States has already noted,
172 the progress made between the Brussels
draft and the Dunkel draft show that the language of Article 24.5 evolved from a simple prohibition
against invalidation or denial of registration (in the Brussels Draft) to a requirement that Members not
even "prejudice" the validity of the registration of the trademark. Further, this prohibition on
prejudice was extended to cover common law tradem arks, and a prohibition against prejudicing the
right to use a trademark – on grounds of similarity with a GI – was added. Nowhere in this
negotiating history – in which the scope of protection for certain trademarks was steadily increased –
is there any indication of an intention to permit the emasculation of the very heart of the trademark
right.

179. The EC's Vienna Convention analysis of Article 24.5 is seriously flawed. Starting with the
ordinary meaning, the EC inexplicably begins with the curious statement that "A 'trademark' is not a
right", referring to Article 15.1 of the TRIPS Agreement for support.
173 Apparently, the EC makes
this statement in order to justify its argument th at the word "trademark" should be understood without
regard to the trademark's inherent rights. But this is incorrect. Article 15.1 explains the types of
"signs" that are capable of constituting a trademark. In fact, the title of Article 15 is "Protectable
Subject Matter", indicating what signs may be capable of functioning as trademarks if they meet the
criteria in TRIPS Article 15, i.e., the ability to distinguish goods, as well as any statutory criteria
under national law. Of course, a simple "sign" is not a right. The term APPLE is merely a word in the
public domain that identifies a type of fruit. But once the term APPLE is used as a source indicator
and a quality guarantee for computers, it functions as a trademark. Furthermore, once a sign is
registered as a trademark, Article 16.1 specifically states that a trademark accords to its owner certain

170 US Response to Panel Question 76, para. 102.
171 The Appellate Body in US – Section 211 emphasized the importance of the exclusive nature of these
rights, finding that Article 16.1 confers on the owner of "registered trademarks an internationally agreed
minimum level of 'exclusive rights' that all WTO Members must guarantee in their domestic legislation", and
that these exclusive rights "protect the owner against infringement of the re gistered trademark by unauthorized
third parties." Appellate Body Report, United States – Section 211 , para. 186. See also Advocate General's
Opinion in Case C-10/89, SA CNL-Sucal NV v. HAG GFAG, delivered on 13 March 1990 [1990] ECR I-3711, at
para. 19 ("A trademark can only fulfil that role [i.e., to identify the manufacturer and to guarantee quality] if it is
exclusive. Once the proprietor is forced to share the mark with the competitor, he loses control over the
goodwill associated with the mark. The reputation of hi s own goods will be harmed if the competitor sells
inferior goods. From the consumer's point of view, equally undesirable consequences will ensue, because the
clarity of the signal transmitted by the trademark w ill be impaired. The consumer will be confused and
misled."). Exhibit US-8.
172 US Responses to Panel Questions, paras. 99, 104; US Oral Statement, paras. 64-65.
173 EC Response to Panel Question 76, at para. 200.

"exclusive rights". Thus, the EC's conclusion that "the 'right to use a trademark' is the right to use a
sign" is unsupported by the ordinary meaning of "trademark".

180. The EC attempts to support its "ordinary mean ing" interpretation of the phrase "right to use a
trademark" by reference to a WIPO publication th at, according to the EC, breaks down the "right to
use the trademark" into two entirely separate elements – "the right to use the trademark" and "the right
to exclude others from using the mark", where the former relates to the right to place the trademark on
labels, packaging, etc.
174 These statements are irrelevant and misleading. Not only would a WIPO
publication not be part of the "context" of the WTO agreements for purposes of a Vienna Convention
type of analysis, WIPO was not even purporting to in terpret the ordinary meaning of "right to use" in
the context of Article 24.5 of the TRIPS Agreement. Moreover, the EC app ears to take these quotes
out of context. In the two publications cited by the EC for the same concept 175, WIPO explains as
follows:

A trademark is any sign that individualizes the goods of a given enterprise and
distinguishes them from the goods of its competition. This definition comprises two
aspects, which are sometimes referred to as the different functions of the trademark,
but which are, however, interdependent, and for all practical purposes should always
be looked at together.
176
181. WIPO also states in both publications that "[i]t follows from the mark's basic function of
distinguishing the goods of its owner from those of others that he must be able to object to the use of
confusingly similar marks in order to prevent cons umers and the public in general from being misled.
This is the essence of the exclusive right afforded to the trademark owner by registration." 177 Reading
these two statements together, it is clear that WIPO considers that the right to affirmatively use a
trademark (i.e., to "individualize the goods of a given enterprise"), and the right to exclude all others
from confusing uses ( i.e., to "distinguish [goods] from the goods of its competition"), are
"interdependent, and for all practical purpo ses should always be looked at together." 178 The EC,
however, ignores the interdependence of these two concepts, thereby contradicting WIPO's own
understanding that they should always be considered together.

182. As for the protection in Ar ticle 24.5 against measures that "prejudice ... the validity of the
registration of a trademark", the EC has explained that a trademark is either valid or invalid
179, thereby
entirely ignoring the important effect of the word "prejudice" detailed by the United States, a word
that was specifically added by the drafters after the Brussels draft.

183. In examining the context, the EC repeatedly refuses to address the fact that Article 24.5 is a
clearly-labeled "exception" to the GI section.
180 Instead, the EC argues that the interpretation by the
United States would result in a situation in which GI protection would be virtually meaningless, as GI

174 EC Response to Panel Question 76, paras. 201-202.
175 See EC First Written Submission, para. 303, n. 146; EC Response to Panel Question 76,
paras. 201-202.
176 WIPO, Introduction to Intellectual Property Theo ry and Practice (Kluwer 1997), p. 184 (emphasis
added) (Exhibit US-69); WIPO, Introduction to Trad emark Law & Practice: The Basic Concepts, A WIPO
Training Manual (1993), pp. 9-10 (emphasis added) (Exhibit US-70).
177 WIPO, Introduction to Intellectual Property Theo ry and Practice (Kluwer 1997), p. 205 (emphasis
added) (Exhibit US-69); WIPO, Introduction to Trad emark Law & Practice: The Basic Concepts, A WIPO
Training Manual (1993), p. 52 (emphasis added) (Exhibit US-70).
178 WIPO, Introduction to Intellectual Property Theo ry and Practice (Kluwer 1997), p. 184 (emphasis
added) (Exhibit US-69); WIPO, Introduction to Trad emark Law & Practice: The Basic Concepts, A WIPO
Training Manual (1993), pp. 9-10 (emphasis added) (Exhibit US-70).
179 EC Answer to Question 76, paras. 203-204.
180 EC Answer to Question 76, paras. 212-213.

owners would be "prohibited ... from even using that indication." 181 The EC apparently
misunderstands the scope of the rights accorded to trademark owners by Artic le 16.1, which provides
the right to prevent all uses that "result in a likelihood of confusion." Pursuant to the proper
interpretation of Article 24.5, GIs that are identical or similar to trademarks can indeed be used in an
affirmative way, but only to the extent that they do not result in a likelihood of confusion with respect
to grandfathered trademarks.

184. Rather than addressing the negotiating histor y of Article 24.5 on its own terms, the EC
purports to interpret Article 24.5 based on the negotia ting history of an entirely different provision –
Article 24.4.
182 Article 24.4 provides an exception to Article 23 of the TRIPS Agreement, by
grandfathering certain uses of geographical indica tions for wines and spirits, by persons other than
that GI right holders, that would otherwise be prohibited pursuant to Article 23 of the TRIPS
Agreement. In its current form, Article 24.4 does not refer to trademarks.

185. Although, as pointed out by the EC, it is true that the precursor to Article 24.4 specifically
referred to trademarks, it did so only as a subset of the broader category of geographical indications
"used with regard to goods originating outside the territory of the PARTY ... by nationals or
domiciliaries of another PARTY."
183 Unlike with Article 24.5 and its predecessors, trademark rights
were not the focus of Article 24.4. The phrase "incl uding [use] as a trademark" simply pointed to an
example of the type of sign that might be affirmativ ely used. Thus, in this context, it was logical to
address the affirmative right to use signs or i ndications on labels, advertising, etc., as the
non-trademark owners in the broad group of user s addressed by the provision likely had no
intellectual property rights at all to address. The EC, however, somehow finds the possibility for
co-existence of trademarks and geographical indicati ons where none existed, in an early version of
Article 24.4 that mentions trademarks only in passing. Moreover, as a clearly-marked exception to GI
protection, there was nothing in the provision that would diminish the protection required by
Article 16.1.

186. Despite the EC's explanation to the contra ry, the removal of the specific reference to
trademarks in the Dunkel draft did not appear to have any practical effect on Article 24.4. The
drafters likely decided that there was no need to specifically mention the use of a GI as a trademark,
given that it is already implied by reference to "c ontinued and similar use of a particular geographical
indication", where that affirmative use of a trademark was simply one of a number of types of uses. It
follows that if the affirmative use of a GI by others, whether or not any intellectual property rights
were involved, is grandfathered, then affirmative use of a trademark must also be grandfathered. Why
should trademarks be at a disadvantage to users who have no intellectual property rights at all. Thus,
the reference to trademarks in the prior version of Art. 24.4 was simply superfluous, as there is no
reason to believe that affirmative use of trademarks is now excluded from its scope.

187. In addition, however, even if the added prohi bition in Article 24.5 on prejudicing the "right to
use" a trademark includes the affirmative right to use the trademark in connection with goods, this
added prohibition does not eliminate or reduce the prohibition on prejudicing the right to exclude
others from using identical or similar signs. Contrary to the EC's claims,
184 there is nothing
duplicative about protecting both the trademark owner's right to exclude others from using identical or
similar signs and protecting that owner's right to use the trademark in commerce. To the contrary,
including both protections ensures that the implementation of the GI obligations does not prejudice
the trademarks falling under Article 24.5.

182 EC Response to Question 76, paras. 216-219.
183 Gervais, The TRIPS Agreement – Dra fting History and Analysis , Excerptions from the Brussels
Draft, Paragraph 1 (Prior Version of Article 24.4), pages 201-2. Exhibit US-71.
184 EC Responses to the Panel's Questions, para. 207.

E. A
RTICLE 24.3 OF THE TRIPS AGREEMENT DOES NOT PERMIT OR MANDATE THE EC'S
VIOLATION OF ARTICLE 16.1 OF THE TRIPS AGREEMENT
188. The EC argues that Article 24.3 of the TRIPS Agreement requires the EC to deprive
trademark owners of their Article 16.1 rights. In doing so, however, the EC is forced to ignore critical
elements of the ordinary meaning of the provision, as well as its context and the object and purpose of
the TRIPS Agreement. In particular, the EC entirely ignores the first four words of Article 24.3.

189. Article 24.3 begins with the phrase "In impl ementing this Section", and then proceeds to
detail what a Member shall not do "In implementing th is Section". The EC's reading of Article 24.3,
in addition to ignoring the fact that it is a clearly -marked exception to GI protection, transforms the
language "In implementing this Section" into "In implementing this Ag reement." As detailed herein,
these have two very different meanings.

190. The phrase "this Section" refers to Part II, Section 3 of the TRIPS Agreement – the GI
section. It follows that Article 24.3 does not establish any limitations on what Members must do in
implementing other sections of the TRIPS Agreement, such as the trademark or copyright sections.
For example, Article 24.3 does not say that "In implementing the trademark section (Section 2), a
Member shall not diminish the protection of geographical indications ...".

191. Indeed, with respect to the GI Regulation, in implementing the trademark section of the
TRIPS Agreement and Article 16.1 thereof, the EC was in fact required to amend the GI Regulation
in order to comply with the obligations of that Section. Pursuant to Article 1.1 of the TRIPS
Agreement, Members are permitted to implement mo re extensive protection than required by the
TRIPS Agreement, "provided that such protecti on does not contravene the provisions of this
Agreement." The United States has shown that th e extensive protection provided to GIs by the GI
Regulation does, in fact, contravene the provi sions of the TRIPS Agreement – specifically,
Article 16.1. As detailed above, Article 24.3 does not provide an exception to a Member's obligations
under Article 16.1.

192. As detailed in the oral statement of the Un ited States, the EC misconstrues Article 24.3 to
create a major and permanent exception to not just th e trademark section, but to every other section of
the TRIPS Agreement. Under the EC's interpretation, a Member has an obligation to apply all aspects
of a pre-TRIPS GI regime to all GIs – including t hose registered after 1 January 1996 – even though
that means that the Member will never, for instance, fully implement the rights granted trademark
owners by Article 16.1. To illustrate, the EC's reading would mean that a country acceding to the
WTO could permanently avoid the results of its TRIPS negotiations on trademark protection by
introducing a "co-existence" regime the day before its accession took effect. Indeed, a Member could
have introduced a GI protection system under wh ich all similar trademarks, regardless of when
registered, had to be invalidated, regardless of an y other WTO obligation. This would have provided
a road map for Members to avoid the disciplines of the TRIPS Agreement, as the TRIPS Agreement
text, and Article 24.3 in particular, was essentially agreed to by December 1991, three years before
the WTO Agreement came into force.
185

193. Under the EC's expansive reading of Artic le 24.3 – requiring a freezing of GI protection
systems regardless of any WTO obligation (and not just the GI obligations) – a Member could put in
place a GI "protection" regime that exempted GI ow ners from the copyright and patent disciplines, or,
indeed, any other WTO obligations, and then point to Article 24.3 as a broad exception to those
obligations. Contrary to the customary rules of treaty interpretation, this would permanently render

185 The GI Regulation entered into force a year and a half later, on June 5, 1993

redundant parts of the TRIPS Agreement, and would lead to manifestly absurd results. 186 F o r
instance, a WTO Member could deny copyright protec tion to any film that used the word "parmesan"
in connection with any product other than the pr oduct qualifying in the EC for that name, and claim
that Article 24.3 granted an exception to copyright protection.

194. The EC responds that Article 24.3 is limited in scope because it relates only to measures that
"diminish the protection of geographical indications", where protection should be narrowly defined in
such a way that it relates to trademarks, but not to patents or copyrights (or, presumably, any other
WTO rights and obligations).
187 The EC states that "[i]n order to 'protect' geographical indications it
is not necessary, for example, to limit patent rights or copyrights."188 But Article 24.3 is not limited to
measures that are "necessary" to protect geographi cal indications: by the EC's reading, it simply
creates a broad exception for any protection provided to GIs.

195. Even if Article 24.3 applied only to measures "necessary" to protect GIs, however, the EC has
not explained why – and there is no evidence that – "protection of geographical indications" makes it
"necessary" to eliminate Article 16.1 trademark rights for trademarks that are not misleading or
otherwise subject to invalidation pursuant to the GI Section (Section 3) of the TRIPS Agreement.

196. Finally, the EC contends that the phrase "pro tection of geographical indications that existed"
in Article 24.3 applies to systems of protection, rather than to the protection of individual
geographical indications.
189 In support, the EC states that "exi sted" modifies the term "protection",
rather than the term "geographical indications", a nd further points out that "geographical indications"
is not premised with the word "the." At best, the EC has demonstrated that the text is ambiguous as to
whether the emphasis is on "protection" or "geogra phical indications." For example, although the EC
contends that the absence of the wo rd "the" prior to the term "geographical indications" indicates that
it does not refer to individual geographical indicati ons, the Spanish version does, in fact, premise the
phrase "indicaciones geográficas" with the word "las" (Spanish for "the"). The use of the word
"existía" does not take away from this important fact. Similarly, in the French version, the word "des"
means "of the" in English.

197. Moreover, it is not determinative that the subject of the verb "existed" is "protection", and not
"geographical indications." "Protection" could just as easily mean protection as it relates to individual
geographical indications, as it could mean the general scope or level of protection overall. Indeed, it
is important to note that Article 24.3 does not re fer to the "scope of protection" or "level of
protection," which is inherent in the EC's interpretation.

F. T
HE EC HAS NOT SHOWN THAT THE GI REGULATION'S TREATMENT OF TRADEMARKS
CONSTITUTES A LIMITED EXCEPTION WITHIN THE MEANING OF ARTICLE 17 OF THE TRIPS
AGREEMENT
198. The EC argues that "co-existence" – by whic h it means the inability of a trademark owner to
prevent infringing uses of identical or similar geogr aphical indications – constitutes recourse to the
"fair use of descriptive terms" limited exception included in Article 17 of the TRIPS Agreement. 190
The EC implies that there is support for this proposition based on the fact that US law includes a "fair

186 Vienna Convention, Article 32(b).
187 EC Response to Panel Question 74, para. 196.
188 EC Response to Panel Question 74, para. 196.
189 EC Response to Panel Question 74, paras. 187-193.
190 EC First Written Submission , para. 318. While agreeing that it has the burden of demonstrating
that the EC GI Regulation satisfies the limited trademark exception in Article 17, the EC fails to meet that
burden. EC Response to Panel Question 75, para. 199.

use of descriptive terms" exception.
191 The United States notes that US law with respect to this
dispute is irrelevant, but the way in which the issue was raised is instructive for the Panel and for that
reason, the United States will address the reference.

199. The EC is correct that the US Lanham Act provi des for "the use of a term ... otherwise than as
a 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."
192 There are two critical differences, however, between
US law and the EC's apparent view of TRIPS Artic le 17. US law requires that the alleged infringer
relying on the fair use defense must be able to show that he or she is using the term "otherwise than as
a mark."193 Because a "mark" functions as a distinctive identifier of a source of goods coming from a
particular undertaking, the use of a term in co mmerce as such a distinctiv e source identifier that
infringes the prior trademark would not be allowed, in US law, under the fair use defense. To be
allowed under US law, the use must be in a non-trademark sense, or in other words, in a
non-distinctive sense.194

200. The second critical difference between US law a nd the EC's apparent view of Article 17 is
that US law calls for a case-by-case analysis of whethe r the particular use of a sign at issue in a given
case is in fact "fair use of a descriptive term", with an examination of whether the use is in a
non-trademark sense, whether there is good faith use, and other factors. 195 The EC, by contrast,
apparently considers that every use of a registered geographical indication that is similar or identical
to a registered trademark is automatically "fair use of a descriptive term," by virtue of the simple fact
that the geographical indication has been registered.

201. The United States has explained that a bla nket inability of trademark owners to prevent
confusing uses of registered GIs does not constitu te a "limited exception" within the meaning of
Article 17 of the TRIPS Agreement.
196 The same phrase in TRIPS Article 30 has been interpreted by
the panel in Canada – Patent Protection "to connote a narrow exception – one which makes only a
small diminution of the rights in question." 197 With respect to the exception to patent rights ( i.e.,
Article 30), the panel agreed with the argument presented by the EC in that case that the term
"'limited' is to be measured by the extent to whic h the exclusive rights of the patent owner have been
curtailed."198

191 EC First Written Submission, para. 318 (note 154).
192 Section 33(b)(4) of the US Lanham Act (15 USC 1115(b)(4)). Exhibit EC-6.
193 15 US C. Section 1115(b)(4).
194 Because GIs are intellectual property rights for purposes of the TRIPS Ag reement, they are not
merely descriptive terms, as the EC claims, or they would not be protectable. They are protectable under the
TRIPS Agreement because they are indi cators of geographic origin where a given reputation, quality or other
characteristic is essentially attributable to that geograph ic origin - something more than just a mere place name.
Therefore, if used as a GI - which under US law means used as a mark or indicator of source or some other
characteristic other than merely a place name - they are not "descriptive" terms.
195 The GI Regulation would similarly have called for a case-by-case analysis, had the EC not
specifically rejected a proposed ame ndment by the Committee on Legal Affairs and the Internal Market of the
European Parliament that would have incorporated the substantive disciplines of trademark law, including the
fair use exception, into the GI Regulation. See US Oral Statement, at para. 75, citing Opinion of the Committee
on Legal Affairs and the Internal Market for the Committee on Agriculture and Rural Development on the
proposal for a Council regulation amending Regulation (EEC) No 2081/92 on the protection of geographical
indications and designations of origin for agricultural products and foodstuffs, European Parliament,
2002/0066(CNS) (10 September 2002), pp. 13-14. Exhibit US-21.
196 US Oral Statement, paras. 74-75.
197 Panel Report, Canada – Patent Protection , para. 7.30. Although the panel, in Canada – Patent
Protection, was interpreting Article 30 of the TRIPS Agreement, it noted that all of the exception clauses in the
TRIPS Agreement (Articles 13, 17, 26.2 and 30) were derived from the same model – Article 9(2) of the Berne
Convention for the Protection of Literary and Artistic Works. Id. at para. 7.71 n. 420.
198 Id., para. 7.31.

202. TRIPS Article 17 further provides that exceptions must "take account of the legitimate
interests of the owner of the trademark ."199 In interpreting the phrase "legitimate interests" with
respect to TRIPS Article 13, in the copyright context, the US – Section 110(5) panel found that one
way to look at "legitimate interests is the economic value of the exclusive rights conferred" by the
intellectual property right on its holder. 200 Moreover, Article 17 provides that the limited exception
must take account of the interests "of third parti es." Among such third parties are consumers that are
likely to be confused by the use of a sign, including of a geographical indication, that is identical or
similar to a registered trademark.

203. Applying this analysis, the inability of a tr ademark owner to prevent a competitor from using
an identical or similar sign in the course of trade could, in most cases, destroy the economic value of
the trademark by severely curtailing the "economic va lue of the exclusive rights conferred." The GI
Regulation places no limits on the manner in which a geographical indication can be used. Instead,
the Regulation calls for simultaneous use of trademar ks and conflicting registered GIs without taking
"account of the legitimate interests of the owner of the trademark and of third parties."

204. A limited exception to trademark protection, such as that provided by a "fair use of
descriptive terms" exception should take into account the legitimate interests of the trademark owner
and of third parties. It should be possible to in form consumers about the origin of a product and its
characteristics through the use of descriptive terms in a non-trademark sense without affirmatively
confusing the consumer about the source of the goo ds. It is possible simultaneously to protect the
legitimate interests of the consumer, the GI owner, and the trademark owner.

205. The EC also argues that with "co-existen ce," there is only a "limited" exception because the
trademark owner's Article 16.1 rights are violated "only" by those qualified to use the GI.
201
However, providing protection to trademark ow ners against all but "one" type of use ( i.e., use of
geographical indications in any way), as the EC pr oposes, does not provide for a limited exception.
The blanket "exception" granted by the EC is in no sense "limited" or tailored whatsoever to the
legitimate interests of the particular trademark ow ner involved. Furthermore, there are no limits on
the number of potential GI right hol ders for each individual GI. Under the EC's proposed "limited"
exception, a trademark owner may be forced to al low concurrent use by tens, hundreds, or even
thousands of GI right holders that cause a likelihood of confusion with respect to the trademark.

206. The United States also notes that even under the EC's own interpretation of Article 17, the EC
fails to acknowledge that non-geographic names are subject to registration under Article 2(3) of the
GI Regulation ( e.g., Feta). The EC has not explained how the Article 17 fair use exception could
apply to non-geographic terms.

207. Finally, the EC asserts that the GI Regulation takes into account the legitimate interests of the
trademark owner and of third parties in three ways.
202 First, the EC states as follows:

[E]ven if Article 14(3) of Regulati on 2081/92 does 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.

199 Emphasis added.
201 EC Responses to Panel Questions, para. 317.
202 EC Responses to Panel Questions, para. 319.

208. In other words, the EC appears to be arguing that diminishing Article 16.1 rights for all
trademarks other than well-known marks constitu tes a "limited exception". But well-known marks
constitute a narrow subset of all trademarks protected by Article 16.1. And Article 17 addresses
"limited exceptions to the rights conferred by a tr ademark", implying an analysis for each trademark,
rather than general exceptions to a broad class of tr ademarks (in this case, all trademarks that are not
well-known). As noted above, this is in sharp cont rast to the EC GI Regulation, which offers a
blanket exception that is not limited to the legitima te interests of the particular trademark owner
involved.

209. Next, the EC states that geographical indicati ons serve to provide valuable information to
consumers, and thereby "take account of the legitimate interests ... of third parties." This statement is
incorrect. This dispute concerns the very situation in which a registered GI is used in a manner likely
to result in confusion vis-a-vis a prior trademark. This will harm the interests of consumers, contrary
to the claims of the EC, as they will purchase produc ts that they do not intend to purchase because of
confusion over the name.

210. Lastly, the EC states that the legitimate inte rests of trademark owners and third parties are
taken into account by EC legislation, because use of the registered GI is subject to EC legislation on
labeling and misleading advertising, and by member State laws on unfair competition. Here the EC
does not even pretend to consider the interests of trademark owners or of third parties in the manner
required by TRIPS Article 17. Instead of taking in to consideration the legitimate interests of the
owner of "the" trademark that may be subject to fair use – as required by Article 17 – the EC proposes
a blanket exception to a broad class of trademarks (here, all prior, registered trademarks that co-exist
with registered GIs). The fact that certain acts that constitute trademark infringement may also be
subject to prohibition under other EC or member State legislation is simply not relevant to a
determination as to whether the infringement of a give n trademark by a given use is subject to the fair
use defense.

211. In sum, the EC is far from sustaining its bur den of proving that the EC GI Regulation falls
within the "limited exceptions" permitted under Article 17.

VIII. THE EC GI REGULATION IS INCONSISTENT WITH ARTICLE 22.2 OF THE
TRIPS AGREEMENT
212. As the United States stated in its first wr itten submission, the EC GI Regulation fails in
several respects to provide the required legal means to interested parties with respect to geographical
indications.
203 First, as discussed above, because the GI Regulation imposes requirements of
equivalence and reciprocity and requires certain inspection structures of the WTO Members in which
the relevant geographical area is found, it does not ma ke the legal means available to all interested
parties to protect their GIs, or to object to the re gistration of misleading GIs. The EC's only response
is that there are no conditions of reciproc ity and equivalence imposed on WTO Members. 204 The EC
makes no response with respect to the requirement for inspection structures. The United States
submits that these conditions do exist and that they mean that interested parties in non-EC WTO
Members do not have the required legal means to protect their GIs or to object to the registration of
misleading GIs.

213. Similarly, the United States argued that th e requirement that nationals of non-EC WTO
Members cannot apply for registration and protection, or object to a GI registration directly, but must
rely on the active participation and involvement of their home government is also a failure to provide

203 Paras. 171-183.

the required legal means. 205 The EC's only response is that this is a "reasonable procedure and
formality" under Article 62.1 of the TRIPS Agreement. With all due respect, that is beside the point.
Many nationals of non-EC WTO Members are simply unable to meet the conditions for registration or
objection, because of factors that are out of their control. These interested parties do not have the
legal means to register and protect their GIs, or to object to the registration of a GI, because the EC
has failed to provide those legal means to them. This failure is inconsistent with Article 22.2 of the
TRIPS Agreement.

214. The United States also argued that the GI Regul ation appears to require an economic interest
in the EC as a prerequisite to filing an objection,
206 whereas Article 22.2 of the TRIPS Agreement
provides that legal means must be provided to all in terested parties, including those with an economic
interest outside the EC. The EC's response is to de ny that there is any such requirement. The United
States requests, therefore, that if the Panel agrees th at there is such a requirement, that the Panel make
a finding that it is inconsistent with Article 22.2.

215. Finally, the US argued that, whereas Article 22.2 obligates the EC to provide interested
parties with the legal means to prevent misleading uses of geographical indications, the GI Regulation
only permits objections on the grounds that the re gistration 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."
207 Plainly, a registered name might be misleading without
necessarily satisfying the high standard for objecti ons in the GI Regulation, so these grounds are
narrower than permitted under Article 22.2. The EC counters that such a name would not be
registered if it were misleading. 208 But this argument ignores the fact that it is the interested parties
who should be provided the legal means to prevent such uses under Article 22.2, a requirement that
cannot be satisfied by a conclusory and basele ss statement that no "misleading" geographical
indications would be registered in the first place.

216. Finally, the EC notes, at paragraph 433 - 436 of its first written submission, that the EC GI
Regulation is not the only means to protect geogra phical indications, that there are various labeling,
advertising, trademark, and unfair competition laws that achieve the same purpose. But this argument
ignores two facts. First, with respect to the registration of GIs, according to Article 2(1) of the GI
Regulation, the GI Regulation specifies that EC pr otection of geographical indications of agricultural
products and foodstuffs "shall be obtained in accordance with this Regulation." It does not appear to
permit EC protection of geographical indications to be obtained through other means. Second, with
respect to objections to GI registrations, once a GI is registered on an EC-wide basis, there appears to
be little opportunity for a interested party to preven t the uses of that GI under the national laws of EC
member States or under EC or national trademark rules. Indeed, the EC has not provided any
evidence to support its defense that other EC laws meet the EC's obligations under Article 22.2.
Without such evidence, the EC's defense can only be seen as a concession that the GI Regulation does
not meet the requirements of Article 22.2.

217. Consequently, the Panel should find that the EC GI Regulation is inconsistent with
Article 22.2 of the TRIPS Agreement.

IX. THE EC GI REGULATION IS INCONSISTENT WITH THE ENFORCEMENT
PROVISIONS OF THE TRIPS AGREEMENT
218. The United States explained, in paragraphs 184 - 188 of its first written submission, that the
EC GI Regulation is inconsistent with various TR IPS Agreement requirements to enforce intellectual
property rights, because it denies trademark owners their Article 16.1 rights and fails to provide
interested parties with the required legal means to prevent misleading uses of geographical indications
or acts of unfair competition. Consequently, wi th respect to these infringements of intellectual
property rights, the GI Regulation fails to make fair and equitable enforcement procedures or judicial
review available (Articles 41.1, 41.2 and 41.4), incl uding civil judicial procedures (Article 42), and
fails to provide injunctive relief (Article 44.1).

219. The thrust of the EC's response is that th e enforcement obligations of the TRIPS Agreement
do not apply to the GI Regulation – that the GI Regulation is a procedure for the acquisition of
intellectual property rights, not for enforcement.
209 But the United States submits that, if a measure
makes unavailable to rightholders the required en forcement procedures and remedies to prevent and
deter infringements of covered inte llectual property rights, that measure is inconsistent with the
obligation under TRIPS to make such procedures a nd remedies available. The United States requests
the Panel to so find with respect to the EC GI Regulation.

X. CONCLUSION
220. For the reasons set forth in this second submission, as well as the reasons set forth in the US
first written submission, the US oral statement at th e first Panel meeting, and in the answers to the
Panel's questions, the United States requests that the Panel find that the EC GI Regulation is
inconsistent with the EC's obligations under the TRIPS Agreement and the GATT 1994, and to
recommend that the EC bring its measure into conformity with those requirements.

209 EC First Written Submission, paras. 358 et seq.

ANNEX A-6

OPENING STATEMENT OF THE UNITED STATES
SECOND SUBSTANTIVE MEETING

(11 August 2004)

1. Good afternoon, Mr. Chairman and members of the Panel. We brought this dispute because
the EC GI Regulation provides significant commercial benefits to products and persons receiving GI
status under the Regulation, but imposes prohibitiv e barriers to access to these benefits on non-EC
products and persons. The GI Regulation has bot h the design and the effect of protecting EC
agricultural products and persons against compe tition from non-EC products a nd persons. Let's not
forget that, after 12 years, there is not a single non-EC GI registered under the GI Regulation. Not
one. By contrast, there are over 600 registered GI s for EC products and persons. Further, these
substantial benefits are provided at the expense of owners of prior registered trademarks: those
owners are supposed to have certain rights asso ciated with their trademarks under the TRIPS
Agreement. The EC GI Regulation eviscerates those rights – rights that are critical to the trademark
owner – in favor, again, of those EC products and persons who receive GI protection. Although this
violation of trademark rights is a claim separate fro m that of national treatment, it is consistent with
the approach of the EC Regulation to protect its agricultural production, especially as agricultural
subsidies are reduced or eliminated.

2. The first meeting of this Panel and the submis sions of the EC have, if anything, confirmed our
worst fears. Some of the violations of the WTO agreements are so extreme that the EC can defend the
Regulation only by denying that it says what it says. Whole provisions in the Regulation are ignored,
and whole new provisions are added, based on nothing except the EC's "assurances" during these
proceedings of what the Regulation means, despite the fact that these "assura nces" are contrary to
both the text of the Regulation and to what the EC has consistently said to everyone – including
complainants – outside this room in the past 12 y ears. This effective rewriting of the Regulation is
based, in part, on the EC's assertions that the EC and the ECJ would never read any provision of the
Regulation as inconsistent with the WTO Agreement, regardless of what the Regulation actually says.
Such an assertion is nothing short of remarkable.

3. It is the job of this Panel, not of the EC, to clarify the nature of the WTO obligations and to
make an objective assessment of the facts of th is dispute, including the meaning of the EC GI
Regulation. Contrary to the EC's hope, it is not the US burden to show that the US reading of the EC
GI Regulation is the only "reasonable" one. It is our burden to make a prima facie case that the
Regulation means what it says, which we have done on the face of the Regulation in the light of EC
law. It was then up to the EC to present evidence rebutting that meani ng. In this, the EC has failed.
Although the EC hopes to hide behind a so-called "cons iderable deference" defense, the plain truth is
that it is unable to come forward with a domestic authoritative legal instrument – such as that found in
the Section 301 dispute – supporting the EC's new found reading of the Regulation. Further, if neither
the ECJ nor the EC member States give "considerab le deference" to the Commission's interpretation
of its Regulation, it is hard to see how this Pane l should have confidence that the ECJ would agree
with the EC's interpretation. In short, there is no basis for the EC's newly created defense.

4. The United States would, in fact, welcom e positive evidence, beyond the EC's mere hopes
that the ECJ might in the future ag ree with its assertions in this dis pute, that would support a finding
that the WTO-inconsistent provisions in the GI Regulation do not apply to WTO Members. However,
on the evidence currently before the Panel, the Un ited States simply has no confidence that the EC's
new reading of its Regulation is the correct one, or that the ECJ would so find.

5. One other preliminary comment. I ask the Panel to look closely at what the EC provided in
its second submission with respect to the relevance of the WTO agreements to the interpretation of
EC regulations. It has provided some scholarly opinions that the WTO agreements should not be
ignored, and encouraging WTO-consiste nt interpretations of EC Regulations. But there is nothing in
that submission to suggest that, in the case of th is Regulation, the Commission's invention of new
procedures for WTO Members is a "possible" read ing of a Regulation that on its face requires
reciprocity and equivalence for all third countries.

6. This oral statement is divided into three pa rts. The first discusses the national treatment and
MFN violations under the TRIPS Agreement, the Paris Convention, and the GATT 1994. The second
discusses the Regulation's violation of the GI oblig ations in the TRIPS Agreement – Article 22.2 –
and of the enforcement obligations. The final section discusses the GI Regulation's violation of
trademark rights under Article 16.1 of the TRIPS Agreement.

National Treatment/MFN

"nationals"

7. With respect to national treatment and MF N obligations under the TRIPS Agreement and the
Paris Convention, a threshold question appears to be whether the Regulation treats non-EC nationals
differently from EC nationals. The EC admits ther e are two tracks for registering a GI – a "domestic"
track for persons established and producing GI product s in the EC, and a "foreign" track for persons
established and producing GI products outside the EC . But, according to the EC, these two separate
tracks correspond to a difference in the origin of the product and of the GI, not a difference in the
"nationality" of the producer. The EC further clai ms that "establishment" and "nationality" are two
completely separate concepts, and that less favorable treatment based on where a person is established
does not translate into less favorable treatment of nationals.

8. With all due respect, the EC's position is contrary to principles of treaty interpretation, does
not reflect reality, and would render the national treatment obligation a virtual nullity. We, along with
Australia and numerous third parties, have set out our position and concerns in our various written
submissions on this issue, and I will not repeat all of those arguments now.

9. But I do want to highlight a few issues concerning the EC's overly narrow and restrictive
interpretation of the national treatment requirement. Fi rst, this interpretation is contrary to the EC's
own analysis in support of the GI Regulation. In arguing that the two separate GI Regulation "tracks"
for objecting to a GI Registration are not based on nationality, the EC stated that "Article 7(3) of
Regulation 2081/92 refers to persons which are reside nt or established in the EC, regardless of their
nationality. Similarly, Article 12d(1) refers to persons resident or established outside the EC,
regardless of their nationality."
1 But Article 12d was added to the Regulation just last year, and the
EC justified that amendment as follows, and I quote, "[t]o satisfy the obligation resulting from
Article 22 of the TRIPS Agreement it shoul d be made clear that in this matter nationals
 of WTO
member countries are covered by these arrangements." 2 The EC went on to say that "[t]he right of
objection should be granted to WTO member countries' nationals with a legitimate interest on the
same terms as laid down in Article 7(4) of the said Regulation." 3 Thus, the EC itself equates where a
person is from, i.e., where that person is resident or establis hed, with their nationality: before last
year, there was one "domestic" track for persons "r esident or established" in the EC, which the EC
admitted did not make objections available to WT O Members' nationals. The EC then added an
additional "foreign" track last year for persons "resi dent or established" outside the EC, to adequately

2 Council Regulation No. 692/2003 of April 8, 2003, p. 2. Exhibit Comp-1h.
3 Council Regulation No. 692/2003 of April 8, 2003, p. 2. Exhibit Comp-1h.

cover "nationals" of WTO Member countries. The di stinction in the two tracks for the registration of
GIs is similar to that for objections – the track that applies depends on where the person is established
and producing GI products – and likewise draws a distinction based on EC nationals, on the one hand,
and non-EC nationals, on the other.

10. Second, the EC has said that the "foreign track " conditions of equivalence and reciprocity do
not apply to WTO Members. According to the EC , this is because those conditions apply "without
prejudice to international agreements", and, to avoid a conflict between those conditions and the
national treatment obligations of the TRIPS Agreemen t, the conditions are eliminated such that the
TRIPS Agreement prevails.
4

11. Yet, by arguing that the reciprocity and equi valence conditions must be eliminated for WTO
Members in order to respect the national treatment obligation, the EC obviously considers that those
conditions result in less favorable treatment of na tionals of other WTO Members. The EC cannot,
then, credibly argue the contrary: that conditions th at depend on the origin of the product and of the
GI do not result in different, and less favorable, treatment of nationals seeking to register GIs for those
products.

12. Further, although the EC would like to engage in a detailed discussion of whether
"establishment" in a country always results in a person being a "national" of that country, this is not
the point. It is beyond dispute that, at least for some WTO Members, including separate customs
unions, a real and effective establishment makes a person a "national" of that WTO Member.
Creating a separate track in the GI Regulation for su ch persons results in different treatment of those
persons.

13. In addition, we have made clear that the EC GI Regulation effectively requires that, in order
to register a GI on the same basis as an EC national, a non-EC national must produce a qualifying
product in the EC. Requiring that a person be estab lished in a country before being able to claim
equal access to a system of intellectual property prot ection is a denial of national treatment. This is
clear from Article 2(2) of the Paris Conventio n, which specifically prohibits conditioning the
enjoyment of industrial property rights on establishmen t or domicile. But more than that, if such a
requirement were permitted, what would stop the United States from providing that only those with
domiciles or establishments in the United States can regi ster trademarks, or file patent applications, in
the United States? We, like the EC, could well argue that EC nationals are being treated the same as
US nationals, since both have to be established in the United Stat es to register a trademark, and
neither can do so if they are domiciled or established in the EC. But this could hardly be considered
to be national treatment. The EC argues that "with the growing appreciation and knowledge of
agricultural products and foodstuffs protected by geog raphical indications" the current lack of foreign
companies producing qualifying products in the EC will change.
5 Although this may in fact be true, if
companies are unable to obtain GI protection any ot her way except to abandon their existing GIs, and
instead establish themselves in the EC and create a new EC GIs, this is little solace to US nationals
now producing qualifying products in the United St ates, who are already entitled to as favorable
treatment as their European counterparts.

14. Finally, from a practical point of view, it cannot be open to serious question that it is US
nationals that have an interest in U.S.-based GIs an d EC nationals that have an interest in EC-based
GIs. In the United States, for instance, approxi mately 99% of agricultural land is owned by US

4 EC Second Written Submission, paras. 55-56.

nationals, and only 1% is ow ned by non-US nationals.
6 The EC itself, unable to provide a single
example of a US national owning an EC-based GI, can only speculate that this situation may change
as the value of GIs associated with European products becomes recognized. 7 A GI system that
provides less favorable treatment to agricultural prod ucts and GIs located outside the EC than inside
the EC does provide less favorable treatment to non-EC nationals than to EC nationals. While it is
true, as the EC points out, that like Mr. Larsen of Cognac fame, a non-EC national can move to
France, can buy a French company producing cognac, marry a French national and raise a family in
France, we submit that requiring him to do so in order to register his GI on the same basis as EC
nationals is hardly according him as favorable treatment as EC nationals.

15. The EC this morning provided several supposed examples of non-EC companies taking
advantage of EC GIs. But, looking at the actua l exhibits, it appears that these examples concern
companies incorporated in EC member States. I am not sure on what basis the EC claims that these
are foreign nationals claiming EC-based GIs.

16. By the way, the EC appears to be using Larsen Cognac House as an example of a non-EC
national claiming an EC-based GI. I'm curious to know whether Larsen Cognac House, which has
apparently produced cognac in France since 1926, is not an EC national, or whether, in fact, Mr.
Larsen set up a legal entity that is an EC national before claiming GI status for his product.

17. In its oral statement this morning, the EC claimed that the scope of the national treatment
obligation under the TRIPS Agreement was limited because of the national treatment provisions
provided under Article III of the GATT 1994. There is nothing unusual, however, about both
obligations applying to the same measure. The EC's view that Article III cuts into and narrows the
national treatment obligation under the TRIPS Agreem ent is incorrect and has no basis in the Vienna
Convention rules of treaty interpretation.

Reciprocity and Equivalence

18. With respect to the issue of reciprocity and equi valence, at this point, I can only repeat that
the GI Regulation on its face sets out only two tracks for registering GIs: one for registering products
and GIs originating in the EC and one for regist ering products and GIs or iginating in all other
countries, i.e., "third countries". Article 12(1) of the GI Regulation clearly says that all third countries
hoping to benefit from the Regulation have to have a GI protection system that is equivalent to that in
the EC and have to offer reciprocal protection to EC products. The EC says that these conditions do
not apply to WTO Members, because to do so would be in violation of the WTO agreements (and to
this we agree). Further, beyond the question of wh ether the WTO agreements must be considered in
interpreting EC regulations, the GI Regulation does not provide any procedures for registering GIs
from WTO Members. And neither does the TRIPS Agreement, which simply spells out general
obligations. Thus, even if the reciprocity an d equivalence requirements do not apply to WTO
Members, nationals of WTO Members would still not be able to register their GIs because no
procedures exist for this to occur.

19. The EC provides several examples of agreemen ts containing language similar to the "without
prejudice" language of Article 12(1) of the GI Regulation. But in each of those cases, there is a
simple requirement in the regulation or directive that can be directly supplanted by a specific contrary
obligation in the international agreement. For inst ance, if the requirement for local ownership in the
air carrier regulation conflicts with an intern ational agreement imposing a different ownership

6 Agricultural Resources and Environmental Indicators: Land ownership and farm structure, Economic
Research Service, United States Department of Agricu lture, July 2002, Chapter 1.3, p. 7. Available at
www.ers.usda.gov/publications. Exhibit US-72.

requirement, the specific ownership provision in the in ternational agreement can simply be applied.
Consistent with these examples, the registration pr ocedures and conditions in Articles 12(1) and 12a
could be made inoperative by virtue of specific re gistration provisions for GIs in an international
agreement. By contrast, the GI Regulation provides a track for registering GIs that is specifically
limited to third countries satisfying the reciprocity and equivalence conditions. If a third country does
not satisfy those conditions, there is no registratio n procedure in the GI Regulation, and there is
nothing in the TRIPS Agreement to fill that void.

20. The United States provided examples of the kind of agreements that would give proper
meaning to the "without prejudice" clause, for inst ance, agreements that provide for protection for
specific GIs, which would then not be prejudiced by the GI Regulation's requirements. This included
an agreement with Switzerland that specifically anticipated protection of specific GIs. The EC's only
response is to deny that any of those agreements fall within the scope of the "without prejudice"
language. In the case of Switzerland, the EC pr otests that there is no such specific protection yet.
Now, even assuming that the EC's response is correct, however, it is beside the point. The EC
apparently concedes that such sp ecific agreements protecting GIs were and are anticipated, and that
any such agreements would have to be exempt from the requirements of the GI Regulation. The
"without prejudice" language would thus make sense with respect to any such agreements.

21. The EC also goes to great pains to distance itself from its many past representations to the
WTO Membership that the conditions of reciprocity and equivalence apply to WTO Members – even
invoking the confidentiality of consultations to shield its previous interpretation of this Regulation.
But the plain facts are that the EC has publicized th is interpretation widely, and that this consistent
interpretation is directly contradicted for the first time by the EC's first submission in this dispute.
The EC even goes so far as to deny authorship of the January 16, 2003, communication sent to the
United States confirming that US GIs cannot be re gistered because the United States does not satisfy
the reciprocity and equivalence requirements. Th e United States emphasizes that this document does
no more than confirm what the United States was repeatedly told during consultations. But, in
response to the denials of the EC, the United Stat es notes that this document was included in a
January 16, 2003, communication from Trade Commi ssioner Pascal Lamy to Ambassador Robert
Zoellick. Although much of the letter and attachme nt are not relevant to this dispute, they are
attached as Exhibit US-73 for the Panel's consideration.

22. Before closing on the subject of reciprocity a nd equivalence, I want to emphasize that, if it
were clear that, contrary to the text of the GI Re gulation and contrary to the repeated representations
of the EC – both public and private – the EC GI Regulation does not impose any conditions of
reciprocity and equivalence on WTO Members, the United States would welcome such a factual
finding by the Panel. However, for all of the reas ons that we have set out in our various submissions,
we have substantial concerns that these conditions do apply to WTO Members and that the ECJ would
so find.

Requirement for equivalent inspection structures

23. I would like to move on to one specific aspect of the EC's requirement of equivalence that the
EC does not deny applies to WTO Members: the requirement for the establishment of equivalent
inspection structures. Contrary to the EC's claims, the United States made plain from the beginning of
this dispute its view that the specific requirement for equivalent inspection structures was inconsistent
with the national treatment obligations of the TRIPS Agreement and the Paris Convention.
8

24. And, indeed, this requirement does provide "less favorable" treatment to non-EC nationals.
Under the GI Regulation, EC member States are required to ensure that inspection structures are in

8 E.g., US First Written Submission, para. 64.

place on their territories, and are required to approv e all inspection authorities and/or private bodies
that make up the inspection structures.
9 All such bodies must be responsible to the member State. 10
Therefore, any EC national wishing to register a GI automatically has, by virtue of the EC GI
Regulation itself, a qualifying inspection structure established by his member State. Thus it can
obtain protection for its EC GI. A non-EC national, by contrast, can satisfy the GI Regulation's
inspection requirements only if his sovereign government (1) has en sured the establishment of these
same inspection structures, as dictated by Article 10 the EC GI Regulation; (2) has specifically
approved particular inspection bodies that must also be approved by the EC; and (3) assumes
responsibility for those inspection bodies, as required by the EC. If his government has not
established such structures and approved such bodies, that non-EC WTO national cannot register and
protect his GI in the EC. Needless to say, unlike member States, other WTO Members have no
obligations under the EC Regulation. That non-EC na tional is therefore being treated less favorably
than the EC national as regards the protection of his geographical indications because, in order to
obtain protection for his non-EC GI, he must convi nce his government to subject itself to the EC
through the EC GI Regulation, and dedicate governme nt resources to establish a GI system exactly
like the EC's.

25. The EC has emphasized the supposed extr eme flexibility of this inspection structure
requirement, implying that a US national hoping to re gister his GI in the Un ited States could satisfy
this requirement by simply hiring a private co mmercial company that provides inspection services.
11
But it is not as simple as that. The EC Regulation does not simply require that a non-EC national
contract with a commercial inspection service, even one of those identified by the EC in Exhibits
EC-49 and EC-50 as companies authorized to carry out inspections under the EC GI Regulation.

26. No, to satisfy the EC GI Regulation, the government of the non-EC national must ensure that
structures are in place and must approve the partic ular inspection bodies and take responsibility for
their inspections. If that government has not done so, its nationals are precluded from protection in
the EC. In short, the GI Regulation requires ex tensive foreign government involvement; no non-EC
national can on its own meet the requirements of the GI Regulation.

27. The EC's response is to argue at some length that the EC Regulation's requirement that other
WTO Members establish inspection structures is "n ecessary" to attain the objectives of the GI
Regulation.
12 But the issue before the Panel under the national treatment obligations of the TRIPS
Agreement and the Paris Convention is whether non-EC nationals are treated at least as favorably as
EC nationals with regard to the protection of geographical indications. Since they are not treated as
favorably, the GI Regulation is inconsistent with these obligations. The question of whether the
requirement is "necessary" simply does not enter into the analysis at all: Nothing in the text excuses
less favorable treatment simply because a Member deems the violation "necessary". And since there
is no basis in the TRIPS Agreement or the Paris Convention for the EC's novel "necessary" test, the
Panel should simply reject this request. If anything , a "necessary" analysis is only relevant in this
dispute with respect to the EC's GATT Article XX affirmative defense, and I will discuss this in due
course.

28. But even though there is no "necessary" test in the TRIPS and Paris provisions at issue, I don't
want to leave the Panel with the impression that the GI Regulation's requirement that non-EC WTO
Members establish, approve, and be responsible for pa rticular inspection structures is necessary. It is
not. There is simply no reason to assume that only the government of the rightholder, as opposed to
the rightholder himself, can sufficiently assure the EC that the products claiming GI status qualify for

9 EC GI Regulation, Article 10(1) and (2).
10 EC GI Regulation, Article 10(3).
12 E.g., EC Second Written Submission, paras. 109 et seq.

that status. And it is not clear why it is the gove rnment of the rightholder, and not the government
whose regulation it is, that has to approve or authori ze inspection structures. It is interesting that, in
arguing that the EC inspection structures are "ne cessary", the EC cites the example of the US
regulations concerning organic food , which require that any farmer seeking to claim that his products
are organic must have his farm inspected by a cer tifying agent. Of course, this dispute does not
concern any US measures, and organic labeling is not a private intellectual property right, as are
geographical indications. But since the EC raised it, the Panel should be aware that in the case of US
organic labeling regulations, the USDA maintains a list of certifying agents, including those able to
conduct inspections in the EU, that any farmer in Eu rope can simply call directly and satisfy the US
regulations. There is no unilateral US requirement for foreign government involvement, intervention,
or allocation of resources. The same is not true of a non-EC national who wishes to apply to register
his GI in Europe. He is simply foreclosed unless his government establishes, approves and takes
responsibility for the inspection structures specified in Article 10.

29. Indeed, how would the EC react if the Unite d States, as a condition of protecting EC GIs in
the United States, required the EC to establish a sp ecific inspection structure system designed by the
United States? Suppose further that the inspec tion structure required by the United States is
incompatible with the inspection system the EC has established for its GIs. Would the EC still
consider the unilateral imposition of inspection requirements on other WTO Members appropriate?
Perhaps more to the point, this Panel may wish to consider the impact of numerous WTO Members
imposing their own different inspection system requirements on all other WTO Members as a
condition to protecting foreign GIs. A WTO Memb er wanting its nationals to benefit from GI
protection in the territories of these WTO Members w ould potentially have to establish every one of
these distinct inspection systems in its territory, wh ich – needless to say – would be impossible and
unworkable. Yet that would be the result if th e EC were to succeed in arguing that it is WTO-
consistent for one Member to unilaterally requir e foreign governments to establish a particular
inspection structure in order for their nationals to obtain protection for their GIs.

30. The EC implied this morning that the Un ited States and Australia are asking the EC to
somehow lower its standards for GIs from the Un ited States and Australia. I emphasize, to the
contrary, that the product standards that US nationals have to meet in order to obtain GI protection are
not at issue. But the inspection structures required by the EC are not related to the product
characteristics that qualify them for GI protection. In addition, this dispute is not about what is wrong
with the EC inspection system itself. Rather, the issue is whether the EC can unilaterally require other
WTO Members to adopt the EC's system. The insp ection system may be fine for the EC; this does
not justify the EC's imposing it on us.

Requirement that the non-EC WTO Member itself as sess and verify whether the requirements of the
EC GI Regulation are met and that the non-EC WTO Member advocate for registration on behalf of
its nationals

31. A similar response can be made with respect to the requirement that the non-EC WTO
Member itself assess and verify whether its nati onals have satisfied the EC GI Regulation's
requirements, and advocate for registration on behalf of its nationals. As in the case of inspection
structures, an EC national has the direct means under the GI Regulation to register and protect his GIs.
A non-EC national from a country that is not in a position to assess and verify that the requirements of
the EC GI Regulation are satisfied does not have any ability to do so. Again, it is worth noting that,
as the EC itself has specified, what is required is a substantial dedication of expertise and resources by
the non-EC WTO Member government. Unlike EC na tionals, non-EC nationals cannot on their own
take advantage of pre-established infrastructure to register their non-EC GIs.

32. The EC's response, again, is that what it calls "cooperation" is "necessary" and
"indispensable"
13 to the registration process. And again, as in the case of inspection structures,
whether so-called "cooperation" is "necessary" or "indispensable" is not relevant to the national
treatment issue before the Panel under the TRIPS Agreement and the Paris Convention. The only
issue for the Panel is whether there is less favorable treatment. The EC's apparent excuse that less
favorable treatment is necessary or indispensable is simply without basis.

33. But even so, as noted earlier, the EC's arguments that its requirements for so-called
"cooperation" ring hollow.
14 The EC has not been able to show that, for instance, the United States
Government is in the best position to evaluate wh ether the specifications provided by the rightholder
are sufficiently established, or that it is only the US Government, and not the rightholder, that is
capable of providing the elements necessary to show the rightholder's entitlement to a GI registration.
Further, "facilitating cooperation" with the WTO Me mber is no excuse: it is the very unilateral
imposition of requirements on non-EC WTO Member s – under the guise of forced "cooperation" –
that we find unnecessary. Moreover, the EC's argument that this requirement is "beneficial to the
applicant" – who can "discuss, prepare, file, and where necessary refine and amend his application
directly with the authorities where the geographical area is located" 15 emphasizes both the burden
being placed on the WTO Member and the lack of it s necessity – that it may be "beneficial to the
applicant" does not equate to it being "necessary."

34. The EC's second submission, at paras. 130- 142, makes a number of additional points in
support of its contention that there is nothing wr ong with requiring other sovereign governments to
assess and verify whether an application satisfies the re quirements of the GI Regulation. First, it is of
course incorrect to assert that this is "partially manda ted" – whatever that means – by the definition of
a GI in the TRIPS Agreement.
16 Nothing in TRIPS Article 22.1 requires this, fully or partially.
Furthermore, the EC is requiring that the WTO Member assess whether the EC Regulation
requirements are satisfied, not whether the TRIPS Agreement obligations are satisfied.

35. Second, the so-called "numerous" examples in which governments have agreed to cooperate
can in no way be interpreted as licence for one WTO Member to unilaterally force another WTO
Member to "cooperate". And despite the EC's clai ms to the contrary, the TRIPS Agreement does not
permit such coercion: to the contrary, it requires no less favorable treatment for nationals of other
WTO Members.

36. Third, the EC's citation to the US – Gasoline dispute as an exampl e of where "cooperation"
between countries may be necessary is instructive, but not for the reasons urged by the EC. In that
dispute, the Appellate Body was questioning why, in establishing certain refinery-specific baselines
for foreign refiners, the United States Environmen tal Protection Agency could not have adapted
"procedures for verification of information found in US antidumping duty laws."
17 As the EC knows,
those procedures involve having the foreign compa ny submit information to the US Government, and
having the US Government conduct an on-site verification of those data. The desired "cooperation" in
that case was, therefore, permitting the US auditors to conduct an audit at the foreign refinery. It was
not a unilateral requirement that the foreign govern ment itself assess and verify compliance with US
laws, which is the so-called "cooperation" that the EC has in mind in the EC GI Regulation. More
fundamentally, the requirement at issue in US – Gasoline was analyzed in the context of GATT
Article XX – that is, there was a breach of Article III, and the only issue was whether it was justified
under Article XX.

13 E.g., EC Second Written Submission, paras. 124 et seq.
14 EC Second Written Submission, paras. 124 et seq.
17 EC Second Written Submission, para. 136, citing Appellate Body Report, US – Gasoline, p. 26.

37. Finally, the EC claims that simple transmitta l of a registration application is not difficult and
that the United States should not raise difficulties that other WTO Members might have meeting this
requirement. But, as the EC itself admits, and contrary to what we heard this morning in the EC's oral
statement, the EC's requirement goes beyond a simp le ministerial act. It requires a thorough
assessment and verification of whether an application meets the requirements of the GI Regulation.
Further, the issue is not how difficult this requirement is to satisfy, but whether the EC is justified in
imposing it. Consequently, it is misleading and i rrelevant to assert that "any WTO Member with a
normally functioning government should be able to carry out such an act"
18 – a quotation that was
repeated this morning in the EC oral statement. Fi rst, this is untrue, as I just discussed. Second, if
what is required were a simple ministerial act of transmission, then there is an obvious question as to
why it is necessary, in light of the fact that inte llectual property rights are private rights, for direct
applications for protection in one country to be transmitted through the government of another
country.

Country of origin marking requirement for non-EC GIs

38. I want to include a brief word on the EC's response concerning the country of origin marking
requirement for non-EC GIs. The EC claims, contrary to the plain meaning of the Regulation, that
that requirement applies, not to foreign GIs, but to whichever GI is registered later. The provision in
question – Article 12(2) – is a provision directed purely at the conditions for authorizing the use of
non-EC GIs. There is simply no basis for reading this as applying to EC-based GIs. I point this out
as yet another example of the EC attempting to rewr ite the Regulation on the grounds that it must be
interpreted consistently with the WTO Agreement, regardless of the actual text.

Objections

39. I'd like to turn briefly to the failure to pr ovide national treatment under the TRIPS Agreement
with respect to the ability to obj ect to the registration of GIs. The EC reads the GI Regulation as
giving a right of objection to persons "from a WTO Member", on the one hand, and from "a third
country recognized under the procedur es provided for in Article 12(3)" ( i.e., countries satisfying the
reciprocity and equivalence conditions), on the other. The EC claims that this distinction makes clear
that the conditions of reciprocity and equivalence do not apply with respect to nationals from WTO
Members, but only with respect to nationals from "other" countries. The United States, by contrast,
believes that the correct reading of the phrase "recognized under the procedures provided for in
Article 12(3)" is that it applies both to WTO Members and to other third countries. I will not repeat
our detailed arguments here, but would simply note that the EC's reading only emphasizes even more
the weakness of the EC's argument with respect to th e registration of GIs. According to the EC, this
language in the objection provisions distinguishes between WTO Members and other third countries;
yet such an argument only makes the failure to make any such distinction in the registration
provisions all the more evident.

40. With respect to the GI Regulation's requirem ent that the WTO Member, and not its national,
assess and submit any objections to a GI registration, I refer to the comments I made earlier
concerning the similar requirement for registrations: under this requirement EC nationals have a direct
means to object to registrations, while nationals from non-EC countries that do not process objections
under the EC GI Regulation do not.

41. The EC's responses to this point are a bit cu rious. On the one hand, the EC claims that a
WTO Member does not have to do anything other than transmit the objection, dismissing the notion
that the EC is imposing any real requirements on other WTO Members. On the other hand, the EC

claims that the WTO Member does have to veri fy where the objecting person is resident or
established, and claims to need a "contact" in the government to address "questions relating to the
territory of the third country".
19 It would appear that, in fact, more is required than a purely
ministerial act of transmission. And, of course, the whole point is that the US national should not
have to jump the extra hurdle of convincing the US G overnment to submit his objection for him. It is
circular to claim that this is necessary because th e US Government has to verify that he is a US
national.

Legitimate interest

42. Finally, with respect to objections, the Un ited States noted in its second submission that,
before last year's amendments, only a "legitimate ly concerned" EC national could object to a GI
registration.
20 The EC specifically amended the regulation last year to give WTO Members' nationals
the right to object, yet it deliberately added a different and facially higher standard – one implying
some property interest – for those WTO nationals : they have to have a "legitimate interest".
21 The
United States showed in its second written submission that this is a different and higher standard, and
the EC has not sustained its burden of showing th at this higher standard does not amount to less
favorable treatment for non-EC nationals.

Requirement of domicile or establishment

43. As mentioned earlier, in order to register GIs and object to the registration of GIs on the same
basis as EC nationals, a non-EC national has to beco me established or domiciled in the EC. Further,
for those non-EC nationals whose governments do not satisfy the EC's requirements, for instance,
with respect to inspection structur es, the only way to enjoy their GI rights is to become established in
the EC. Contrary to the EC's second submission, this is not about the EC's ability to ensure that the
product originates in the geographical region indi cated. And it is not about allowing persons
established outside the EC to object. This is about not imposing hurdles on persons established
outside the EC such that, in order to enjoy their intellectual property rights, they have to establish
themselves in the EC. The EC GI Regulation pl ainly does this, and so is inconsistent with
Article 2(2) of the Paris Convention.

National treatment under the GATT 1994

44. Our first submission discussed in detail how the conditions of reciprocity and equivalence
imposed on WTO Members are inconsistent also w ith national treatment obligations under the GATT
1994. And we have also discussed in detail the i ssue of whether the conditions of reciprocity and
equivalence apply to WTO Members. I won't discuss th at issue further here, except to recall that the
EC has presented no arguments that these conditio ns are consistent with the GATT 1994 national
treatment obligations, and to recall that the EC its elf claims that these conditions conflict with the
WTO agreements. That is the basis for their view that the "without prejudice" language in
Article 12(1) eliminates these requirements for WTO Members. Accordingly, the Panel should find
that these conditions are inconsistent with the national treatment obligations of the GATT 1994.

45. With respect to the other issues which I have also discussed above: the requirement for
specific inspection structures and the requirement that other WTO Members assess and verify whether
GI applications satisfy the requirements of the EC GI Regulation, the EC, in its second submission,
simply refers back to its arguments with respect to national treatment under the TRIPS Agreement and

20 Article 7(3) of the GI Regulation.
21 Article 12d of the GI Regulation.

the Paris Convention. Notably, the EC states that these requirements are also imposed on EC
products, so they constitute "equal", not "less favorable", treatment.

46. This curt dismissal of this claim is inter esting, because the EC itself argues that the EC GI
Regulation does not discriminate according to nationalit y, but according to the origin of the product.
Furthermore, the EC has justified its highly techni cal and overly narrow interpretation of the TRIPS
Agreement national treatment obligation based on the fact that the GATT disciplines also cover this
situation. In addition, it is the EC that h as emphasized the differences between the GATT national
treatment obligations and the TRIPS Agreement national treatment obligations.

47. Therefore, we should take some care with th is argument. Treatment between EC products
and non-EC products is clearly not "equal." Ar ticle III:4 of the GATT 1994 then requires that
products from outside the EC be accorded treatment that is no less favorable than that accorded "like
products of national origin." As the Appellate Body has noted, "like" means "[h]aving the same
characteristics or qualities"
22 and has been analyzed in past disputes based on the characteristics of the
products themselves, i.e., physical properties, ability to serve the same end uses, consumer
perceptions of whether the products serve the same end uses, and the tariff classification of the
product.23

48. In the context of this dispute, therefore, the issue is whether an imported product that has
characteristics qualifying it for GI status under the GI Regulation is treated at least as favorably as an
EC product that has those characteristics. The answer is no. The imported product will be denied the
benefits of the GI Regulation in the EC market, not because of any deficiency in the product itself, but
because of a "failure" of the country of origin to establish an EC-style inspection system. These
benefits will also be denied where the government of the country of origin – for instance, the United
States – does not have a mechanism to take on the EC's job to assess whether a product meets the EC's
requirements. This has nothing to do with the characteristics of the product itself. Favorable
treatment is denied to "like" products for reasons related to the product's origin.

49. Further, this Panel should not ignore that the preamble to the Regulation emphasizes the
importance of the production, manufacture, and distri bution of agricultural products and foodstuffs to
the European economy, and emphasizes the intended role of the Regulation in promoting products
having certain characteristics, which "could be of considerable benefit to the rural economy, in
particular to less-favoured or remote areas" in the EC. In this connection, it is hard to ignore that, of
the over 600 registered GIs in Europe, exactly zer o are for products produced outside the EC. And
this, 12 years after the Regulation was implemented. In addition, although the EC argues now that its
active advertisement of the reciprocity and equiva lence requirements were not authoritative, it cannot
be denied that the EC effectively sent a message discouraging any GI applications from countries not
satisfying those requirements. The effect of this discouragement is plain to see. Finally, the
additional requirements that the EC admits imposing on WTO Members – notably, to establish
specific inspection structures and to assess and veri fy whether GI applications meet the EC GI
Regulation's requirements – are simply equivalence by another name, and are similarly designed to
discourage the registration and protection of foreign GIs.

50. In sum, the GI Regulation is inconsistent w ith the national treatment obligations of the GATT
1994.

22 EC – Asbestos, para. 90, citing New Shorter Oxford English Dictionary.
23 EC – Asbestos, para. 101.

Article XX(d) of the GATT 1994

51. But I should note that, even more than in the case of the TRIPS Agreement national treatment
obligation, the EC second submission contains vi rtually no arguments about whether the EC GI
Regulation affords less favorable treatment to impo rted products than to domestic "like" products.
Instead – just as in the case of the TRIPS Agreem ent national treatment discussion – the EC devotes
the bulk of its presentation to justif y why, in spite of the obligations, the various requirements of the
EC GI Regulation are necessary or indispensable to the GI Regulation's objectives. So, let me
respond to the EC's argument that the GI Regulation is covered by the Article XX(d) exception to the
GATT 1994 obligations.

52. It is unfortunate that the EC has only just now, in its second written submission, spelled out
its arguments on Article XX(d). Up until that s ubmission, the EC failed to provide anything beyond
the most conclusory statements on Article XX(d). It was a little amusing to hear this morning the
EC's claim that the United States has not responded at all to these arguments, in light of the fact that
we just received them, and that this statement is the first opportunity to respond. So, let me turn to
them now.

53. The United States submits that the EC is far fro m meeting its burden, even at this late hour.
Article XX(d) requires that the EC demonstrate that the measure that is inconsistent with the GATT
1994 (1) is designed to "secure compliance" with laws or regulations that are not inconsistent with the
GATT 1994; and (2) is "necessary" to ensure such compliance. The EC's arguments fail on both
counts.

54. With respect to the requirement for inspecti on structures, the EC, at paragraph 232, merely
summarizes and cross references its statement that the "requirement of inspection structures is
necessary for the attainment of the objectives of Regulation 2081/92."
24 And that a "similar degree of
protection could not be ach ieved through other means." 25 But the standard in Article XX(d) is
whether the GATT-inconsistent measure "is necessary to secure compliance" with a GATT-consistent
law or regulation, not whether it is necessary to "atta in the objectives" of the GATT-inconsistent law
itself. The EC has not identified the GATT-consis tent law or regulation for which the inspection
structures are designed to ensure compliance, and ha s not described how they secure compliance with
that law or regulation.

55. Further, the EC has not shown that the in spection structure requirements are "necessary" to
ensure any such compliance. The Appellate Body in Korea – Various Measures on Beef considered
that, in the context of Article XX(d), "necessary" is "located significantly closer to the pole of
'indispensable' than to the opposite pole of merely 'making a contribution to'."
26 In EC – Asbestos ,
citing Korea – Various Measures on Beef , the Appellate Body emphasized that the more vital the
objective pursued, the easier it would be to accept a measure as "necessary", implying that, where the
objective is not, for instance, the preservation of human life or health, a stricter standard for
"necessary" may be appropriate.27 Which is, of course, the case here. Finally, a measure is surely not
"necessary" to ensure compliance if an alternative, WTO-consistent measure which the WTO Member
could reasonably be expected to employ is available to it. And as noted earlier, the EC has not met its
burden of demonstrating that there exists no such alternatives.

26 Appellate Body Report, Korea – Various Measures on Beef, para. 161.
27 Appellate Body Report, EC – Asbestos , para. 172, citing Korea – Various Measures on Beef ,
para. 162.

56. In fact, to the contrary, the EC itself offered the example of the US organics regulation, in
which a non-US farmer hoping to use the "organ ic" label in the United States simply contacts a
certifying agent approved, not by his home government, but by the US Department of Agriculture.
The EC also provided the example in US – Gasoline, in which the Appellate Body suggested that the
regulator – in that dispute the US EPA – conduct its own audit of the foreign firms. And, as the
United States discussed in its second submission, the EC itself, in the context of collective marks,
does not require the home government of the rightholder to establish specific inspection structures.
As the Appellate Body has said, these other, less restrictive measures, are relevant as evidence that the
WTO-inconsistent measures are not "necessary".
28

57. It is not at all clear that having a WTO Member government approve and have responsibility
for inspection bodies – as opposed to, for instance, the private rightholder, such as the certification
mark holder – is even a preferable way of achieving the objective of the GI Regulation, let alone that
it is "necessary" to do so. And, even so, what the EC should have shown is not that the WTO-
inconsistent measure is "necessary" to the objective of the Regulation, but rather that it necessary to
ensure compliance with a law or regulation that is not WTO-inconsistent.

58. Similarly, with respect to the requirement th at the WTO Member assess and verify that the GI
application of its nationals meets the EC GI Regul ation's requirements and the requirement that the
WTO Member advocate in favor of the registration on behalf of its nationals, the EC has not indicated
how this requirement "secures compliance" with a WTO-consistent law or regulation. To the
contrary, the EC has only argued that this requireme nt is "indispensable for the implementation" of
the EC GI Regulation.
29 This is not the same as demonstr ating that there is a WTO-consistent
regulation, and that the otherwise WTO-inconsistent requirements imposed on Member are necessary
to ensure compliance with that regulation, two dem onstrations that are necessary to prove entitlement
to the Article XX(d) exception. And indeed , far from being even "indispensable for the
implementation" of the EC GI Regulation, at best, fr om the EC's perspective, this requirement shifts
the burden of analyzing the application from the EC – where it belongs – to other WTO Members.
Further, as discussed earlier, there is no reason that alternative measures – for instance, allowing the
nationals to apply for GI registration directly to the EC – are not reasonably available to the EC.

59. The EC similarly fails to make any showi ng that the requirement that foreign GIs be
identified with a country of origin is necessary to ensure compliance with a WTO-consistent law or
regulation.

60. Finally, the EC simply asserts, with no in formation, no argument, that the chapeau to
Article XX is also satisfied: that is, that these WTO-inconsistent requirements are not applied in a
manner which would constitute a means of arbitrary or unjustifiable discrimination between countries
where the same conditions prevail or a disguised r estriction on trade. But, to the contrary, these
measures mean that any country that protects GIs in the same manner as the EC – with EC-style
inspection structures and with legal mechanisms for assessing whether the requirements of the GI
Regulation are satisfied – may obtain registration and protection of its GIs. Those WTO Members that
do not have such systems cannot obtain such protection. These are countries where the same
conditions prevail, but, because the EC favors count ries that protect GIs the way it does, the EC
arbitrarily and unjustifiably discriminates between them.

61. In sum, the EC has not shown that the WTO-inconsistent measure at issue satisfies the
requirements of the Article XX(d) exception.

28 See Appellate Body Report, Korea – Beef, paras 168-170.

MFN Treatment

62. I would like to shift over to the US arguments with respect to most favored nation treatment
under the TRIPS Agreement and the Paris Convention. The EC GI Regulation grants advantages,
favors, privileges and immunities to nationals from th ird countries that satisfy the EC's conditions of
reciprocity and equivalence: e.g., they can have their GIs registered and protected in the EC. Even the
EC concedes this, at least with respect to non- WTO third countries. In addition, the EC GI
Regulation grants those advantages, favors, privile ges and immunities to nationals of WTO Members
that have established EC-style inspection systems and systems to assess and verify whether GI
applications meet the EC GI Regulation's require ments, while denying those advantages, favors,
privileges and immunities to nationals of WTO Memb ers that have not. Consequently, the EC GI
Regulation fails to accord those advantages, fa vors, privileges and immunities "immediately and
unconditionally" to nationals of all other Members, as required by Article 4 of the TRIPS Agreement.

63. The EC's response is that the imposition of non-discriminatory conditions on nationals is not a
violation of MFN treatment.
30 But it bears emphasizing that these are not conditions that the EC is
placing on nationals, such that the nationals, without discrimination, are in a position to satisfy the
conditions. Rather, these conditions are being pl aced on the government. The national is being
denied his GI rights because of the system that hi s home government has in place – or does not have
in place – with respect to GIs.

64. The EC also claims that it has not yet granted any benefit to any non-EC third country, so that
there can be no MFN violation. Although the lack of any registration of a third country GI is certainly
instructive with respect to whether national treatment is being provided, it is also apparent that
whether to accept GI applications from third countries is made on a country-by-country basis: either a
country has the appropriate EC-mandated mechanisms in place or it does not, and access to the EC GI
regime is granted based on meeting this condition. Th is is thus a failure on the face of the Regulation
to provide MFN treatment with respect to nationals from all WTO Members.

65. The United States has also noted that – as WTO Members in their own right – each member
State of the EC also has an MFN obligation with respect to all other WTO Members, and that by
according advantages, favors, privileges and immuniti es to nationals of other EC member States that
are not immediately and unconditionally accorded to nationals of all other WTO Members through
their implementation of the EC GI Regulation, the EC member States are acting inconsistently with
those MFN obligations. The EC's sole response is th at this is an EC measure, not a member State
measure. But this response ignores two facts: fi rst, the Panel's terms of reference include any
implementation and enforcement measures, which include those taken at the member State level.
Second, member States are not exempted from their MFN obligation simply because they are
"required" to act inconsistently w ith those obligations by an EC regulation. France, for instance, is
prohibited by WTO obligations from granting advantages to German nationals that are not granted to
US nationals. That obligation does not disappear si mply because the EC "requires" France to do that.
The EC's argument at paragraphs 148-149 of its oral statement is extraordinar y. The EC states that
EC member States are WTO Members, yet claims that they have no MFN obligations. But either EC
member States are WTO Members or they are not. Their MFN obligations do not disappear simply
because the measure at issue includes an EC regulation. We suggest, therefore, that the Panel take a
close look at the EC's argument on this issue.

GATT 1994 MFN obligations

66. With respect to the GI Regulation's viol ations of the GATT 1994 MFN obligations, I will
simply refer back to our earlier submissions and comments, and note that this obvious discrimination

30 EC Second Written Submission, paras. 249-250.

against products of certain WTO Members cannot be justified as "necessary" to "secure compliance"
with a WTO-consistent law or regulation under Article XX(d).

Enforcement

67. With respect to the fact that the EC GI Regulation denies enforcement procedures and
remedies that are required under Part III of the TR IPS Agreement, the EC's response in its second
submission is interesting. Most of the EC's disc ussion appears to be directed at the intellectual
property regimes of the United States and Australia, wh ich are both irrelevant and outside this Panel's
terms of reference. The United States can only conc lude that the EC wants to divert attention from
the measure that is before this Panel: the EC GI Regulation.

68. As to a substantive response, the EC's princi ple argument seems to be that the GI Regulation
does not prevent the trademark owner from bringing an infringement action against a rightholder of a
geographical indication.
31 But the point is that the trademark owner cannot prevent confusing uses of
the GI, so he does not have the means to enfor ce his trademark or to obtain remedies against
infringement.

Article 22.2 of the TRIPS Agreement

69. The United States argued in detail in its fi rst submission how the GI Regulation failed to
make the required legal means available to interest ed parties to prevent certain uses in respect of
geographical indications. It does not provide the lega l means for interested parties outside the EC to
register and protect GIs, and, critically, it does not provide the legal means for interested persons –
other than governments – to object to the registra tion of a GI, which is effectively the only way to
prevent certain uses of terms that are proposed as re gistered GIs. The EC's sole response is that
"registration" is not "use" and therefore it is not necessary to provide for the right of objection. But
this does not address the failure to pr ovide the legal means to register GI s at all. And, with respect to
objections, it ignores the fact that, under the GI Regulation, once a GI is registered, the rightholder has
an affirmative right to use that GI. For the inte rested party who does not have the legal means to
object, the game is lost when the GI he would ha ve objected to is registered. The United States
submits, therefore, that the EC GI Regulation is inconsistent with the obligations of Article 22.2 of the
TRIPS Agreement.

Trademark Rights

General comment

70. I turn now to our claim under TRIPS Article 16.1. Article 16.1 obligates the EC to give
owners of registered trademarks the exclusive ri ght to prevent all confusing uses of similar or
identical signs, including GIs. In direct contrast to this obligation, the EC acknowledges that, under
its GI Regulation, even if the owner of a prior valid registered trademark can prove use of an identical
or similar registered GI results in a likelihood of confusion, it cannot prevent continued use of that
GI.
32 Not only is this contrary to the obligation in Article 16.1 of the TRIPS Agreement, it also
undermines what Appellate Body findings and US a nd EC jurisprudence all agree is the core of a
trademark owner's right under Article 16.1.33

32 EC First Written Submission, paras. 302-307; EC Responses to Questions, para. 141.
33 See US First Written Submission, paras. 145-149, citing Appellate Body Report, United States -
Section 211, para. 186; US Supreme Court, College Savings Bank v. Florida Prepaid Postsecondary Education
Expense Board, 527 US 666. 667 (1999) (Exhibit US-14); Advocate General Jacobs' Opinion in Case C-10/89,
SA CNL-Sucal NV v. HAG GFAG, delivered 13 March 1990, [1990] ECR I-3711, para. 19 (Exhibit US-8).

71. The United States believes that each provision of the TRIPS Agreement must be given its full
scope, and our arguments have refl ected this. Both trademarks a nd GIs are granted a sphere of
exclusivity. The EC is correct that a "conflict" may occur between an individual trademark and an
individual GI.
34 But this is not a "conflict" between trademark and GI obligations placed on the EC; it
is merely a "conflict" between rightholders. The rights of those rightholders, and the ways in which to
resolve any "conflicts" between those rights, are set out in the TRIPS Agreement. Specifically, where
the owner of a prior valid registered trademark is confronted with use of a similar or identical GI,
Article 16.1 empowers the owner of the trademark to prevent any use of the GI that is likely to
confuse consumers within a given territory. And wh ere a GI owner is confronted with a similar or
identical trademark, that trademark is subject to invalidation under Article 22.3 if it misleads the
public in a given territory about the origin of the goods.

72. In other words, there is no "conf lict" between the obligations placed upon the EC , as a
signatory to the WTO Agreement, by TRIPS Articles 16.1 and 22.
35 It is not "impossible" in any
sense for the EC to "simultaneous[ly] compl[y]" w ith those provisions by providing both trademark
and GI owners with the means to enforce the s phere of exclusivity granted them by Articles 16.1
and 22.36

73. The EC has five responses to the US arguments in its second submission: first, that there are
no (or few) valid registered trademarks that could be similar or identical to registered GIs; second,
that Article 14(3) of the GI Regulation prevents the registration of GIs that can give rise to confusing
uses vis-a-vis trademarks (so there is no need for Arti cle 16.1 rights); third, that Article 24.5 permits
the EC to eliminate Article 16.1 trademark rights; fourth, that Article 24.3 requires the EC to
eliminate Article 16.1 trademark rights; and, finally, that the GI Regulation's broad grant of immunity
to all who qualify to use a GI is a "limited exception" permitted by Article 17 of the TRIPS
Agreement.

Article 14(3) of the GI Regulation

 Trademarks Containing or Consisting of Geographical Elements

74. The EC's first defense is to claim that, vis-a-vis GIs registered in the EC, trademark owners do
not need their Article 16.1 rights in the EC, since, in the EC's view, few trademarks that contain or
consist of a GI will be registrable. Therefore, th e EC sees little risk that a registered GI will raise a
likelihood of confusion with respect to a prior valid registered trademark. There are two responses to
this argument. First, although the EC has not pr esented any evidence that the number of vulnerable
trademarks is small, the number of marks is irrelevant. The owner of every valid registered trademark
is entitled to its Article 16.1 rights. Further, however , it is a fact that valid registered trademarks can
indeed consist of or incorporate "geographical" el ements. In our first submission, we offered the
hypothetical example of a trademark for LUNA, in connection with cheese, and the potential
registration of a GI for cheese produced in Luna, Spain.
37 We had not submitted the example of a
cheese produced on the moon, but we accept that the EC altered the hypothetical this morning. The
EC's somewhat irrelevant, yet revealing, response is that the town of Luna does not exist "in Spain, or
in any other Spanish speaking country, whether large or small." 38 The EC concludes that EC
trademark officials would likely register "Luna" as a fanciful name. In fact, Luna is a town in Spain,

36 See Panel Report, Turkey – Textiles , para. 9.92. See also Panel Report, Indonesia – Autos ,
para. 14.28.
38 EC Second Written Submission, para. 290 (note 179).

and even has a website. 39 But the EC's glib response indicates, in fact, how easy it is for a
geographical term to be registered as part of a trad emark, even for EC officials trying to avoid such
registrations. We found after midnight last night as we were preparing this oral statement, that there
are quite a few LUNA trademarks registered in Europe. We did not have time to create an exhibit, but
we suggest that you search "Luna" on the OHIM database and see for yourself. Since the EC is
uncomfortable with hypotheticals, other poten tial examples include: CALABRIA, a registered
Community Trademark for pasta, 40 and a region in Italy; DERBY, a registered Community
Trademark for milk products, 41 and a city in the UK; and WIENERWALD, a registered Community
Trademark for meat, vegetables and milk products,42 and a region in Austria.

75. One of the EC's arguments this morning w as that trademarks incorporating geographical
elements can only be registered if they have acqui red secondary meaning. Contrary to this argument,
none of the three registrations discussed above was based on acquired distinctiveness. And we saw no
evidence of acquired distinctiveness in connection with any of the "Luna" trademarks. Therefore, we
suggest that the Panel take the EC's assertions this morning with more than a grain of salt.

76. In sum, validly registered trademarks that consist of or incorporate geographical elements
exist, whether or not the origin of the trademark was geographical. In any event, the EC's argument
ignores the potential for further conflict between prio r registered trademarks and the registration as
GIs of non-geographic names, under Article 2(3) of the Regulation.

Article 14(3) of the GI Regulation cannot substitute for TRIPS Article 16.1 rights

77. Second, the EC states that "Article 14(3) of Regulation 2081/92 provides the necessary means
to trademark owners ... to prevent or invalidate the registration of any confusing geographical
indications."
43 Even if the EC is offering an accurate reading of Article 14(3) – a point I will come
back to later – this provision is not a substitute for Article 16.1. Article 16.1 requires WTO Members
to grant rights to trademark owners to prevent particular uses of identical or similar GIs.
Article 14(3), in contrast, merely permits the EC authorities to deny registration of GIs in some
circumstances.

78. These are two critical distinctions and two criti cal ways in which Article 14(3) falls short of
what is required by Article 16.1. It is not necessarily possible for a trademark owner – or, for that
matter, the EC authorities – to know, on the face of an application for GI registration, if a GI will be
used in a way that raises a likelihood of confusion with respect to a trademark.
44 The EC asserts that
the product specifications submitted with a GI applic ation will include "specifi c labeling details" that
definitively limit the way in which the GI will be used.45 Let me first note that 80 percent of GIs were
registered upon accession of new EC member States, or upon adoption of the GI Regulation, and for
many of those, product specifications are not even p ublished in the EC's Official Journal. Even when
product specifications are published, however, the Panel will note from Exhibit US-77 that the
"specific labeling details"are not that specific at all. The "labeling" requirement for the registered GI
"Lausitzer Leinöl," for example, reads, plain and simply, "Lausitzer Leinöl". The same goes for the
registered GI "Kanterkass, Kanternagelkaas, Kant erkomijnekaas". The "labeling" requirements for
the registered GIs "Timoleague brown pudding" and "Newcastle Brown Ale" read simply "PGI".

39 www.lunavirtual.net.
40 EC OHIM Trademark No. 001575240. Exhibit US-74.
41 EC OHIM Trademark No. 001305929. Exhibit US-75.
42 EC OHIM Trademark No. 000229534. Exhibit US-76.
44 US First Oral Statement, para. 54; US Responses to Questions, para. 87; US Second Written
Submission, paras. 131-135.

These demonstrate that a trademark owner will not n ecessarily know at the time of registration how
the GI will be used or if that use will be confusing.

79. This morning, in paragraphs 181-184 of its oral statement, we heard a bit of a shift in the EC's
position. The EC now admits that GIs in the EC ar e used in much the same way as trademarks, that
is, in a promotional way, to distinguish goods. An d since the EC expects GI s to be used just like
trademarks, the EC appears to be asking what is wr ong with this trademark-like use of GIs, and why
should the EC be concerned that the trademark owner may not be able to stop the use of such GIs if
they are confusing. After, all, the EC argues, this trademark-like use is "legitimate." The problem, of
course, is that under TRIPS Article 16.1, trademark owners have a right to prevent confusing uses of
their signs, including GIs. "Legitimacy" is irrelevant. Under the EC system, trademark owners are
powerless to prevent such confusing uses. We subm it to the Panel that this is contrary to TRIPS
Article 16.1.

80. Another particular issue regarding use of a regi stered GI that could arise frequently within the
EC – a union with 20 official languages – is use of th e GI in translation. Use in translation – which
would not be apparent from the GI application its elf – could cause confusion with a prior valid
registered trademark. The EC appears to suggest, but avoids stating definitively, that the scope of
protected use of a registered GI excludes the right to use the registered name as translated into other
EC languages.
46 The question that has not been answered is: "Does the registration of a term under
the EC GI Regulation give the rightholder a positive right to use that term as translated into other EC
languages?"

81. Nor, as the EC asserts,
47 do labeling, advertising and unfair competition laws offer trademark
owners the standard of protection required by TRIPS Article 16.1 to prevent certain uses. Under these
laws, the trademark owner (along with the general population) is granted other rights, but not the
specific rights guaranteed by Article 16.1. For instance, and using one of the EC's own examples, 48
the fact that a trademark owner might be able to stop injurious, deceptive advertising is no substitute
for being able to prevent confusing uses of identical or similar signs.

82. It is also critical that even under the EC view, Article 14(3) enables or requires the EC
authorities to deny GI registrations in some circum stances. By its express terms, however, TRIPS
Article 16.1 grants rights to trademark owners . This is important because as noted in the TRIPS
preamble, "intellectual property rights are private rights ..." And trademark owners, whose direct
interests are at stake – and not government offici als – are in the best position to identify confusing
uses. While the United States welcomes efforts by the EC authorities to prevent registration of GIs
that conflict with prior registered trademarks, even to the limited extent this is permitted by the GI
Regulation, Article 14(3) cannot be sufficient, on its face, to satisfy the requirements of TRIPS
Article 16.1, which are directed to trademark owners.

83. The EC now suggests that any trademark owner can challenge the validity of the GI
registration before the EU Court of First Instance or, potentially, in infringement proceedings in EC
member State courts, based on the EC's erroneous application of Article 14(3).
49 The implication is
that this ability to challenge the registration on the basis of Article 14(3) permits the trademark owner
to prevent confusing uses of his signs, as required by Article 16.1. But this is not accurate, first,
because any such challenge must be brought within two months of publication of the registration .50

46 EC Second Written Submission, paras. 288, 293, 301.
49 EC Responses to Questions, paras. 153, 181; EC Second Written Submission, para. 296.

This deadline has been ve ry strictly enforced. 51 After two months, even if a trademark owner can
prove that a use of a similar or identical registered GI results in a likelihood of confusion, it will not
be able to challenge the registration. So, any c onfusing uses that arise after this deadline – and the
savvy GI holder would be well advised to be cauti ous in the use of his GI during that time – cannot
give rise to any challenge to the registration. In addition, it does not appear that GI registrations
adopted via accession protocols are challengeable, for instance, even within the two-month time
period.52 Further, challenges to a GI registration by tr ademark owners in the EC member State courts
will similarly be barred for those trademark owners who could have challe nged the validity of the
registration within the two-month deadline under Article 230 of the EC Treaty. 53 W e f i n d i t
fascinating that in its oral statement the EC re ferred to challenging the validity of registrations
without mentioning these deadlines at all. Further, the EC appears to suggest that there are no
deadlines for "referrals" to the ECJ under Article 234, yet neglects to note that even in the case of
referrals, the registration may not be cancelled af ter the two-month deadline if the trademark owner
could have challenged the registration under Article 230.

84. In any event, objections and challenges to GI registrations would be evaluated based on the
substantive standard of Article 14(3), which is mo re restrictive than the standard required by TRIPS
Article 16.1. The EC completely rewrites Article 14(3) when it claims that Article 14(3) "says that
the registration of a geographical indication shall be re fused if it is likely to lead to confusion with a
trademark."
54 On its face, Article 14(3) limits the ci rcumstances in which a GI will be denied
registration to those instances in which a trademark' s "reputation and renown and the length of time it
has been used" make the GI "liable to mislead the consumer as to the true identity of the product."
The EC has said that "the content of Regulati on 2081/92 must be evaluated on the face of the
measure."55 We agree. And that is why the EC's reinvention of that provision should be rejected.

85. There was a discussion this morning about the role that reputation may play in the confusion
analysis. The EC implies that reputation is always a factor in the confusion analysis, but, if you look
even at the sources cited by the EC, it is plain that reputation is a factor in some instances – in the case
of dissimilar goods, for instance – but not all. For in stance, in the case of iden tical signs for identical
goods, "reputation" would not enter into the analysis at all. Further, we encourage the Panel to
consider the case of the owner of a registered trad emark, perhaps with rights in only one EC member
State, whose trademark is registered, but has no reputation, renown or length of time of use.
Article 14(3) would not prevent the EC-wide registra tion of a GI that is confusing vis-a-vis that
trademark. And would the trademar k owner realistically be able to challenge in court a Commission
decision to register that GI, in light of Article 14(3)'s requirement that the Commission consider the
GI registration in light of the trademark's reputati on, renown and length of time of use? Yet, that
trademark owner is entitled to his Article 16.1 rights, despite the lack of reputation, renown, or use.
In sum, Article 14(3) simply does not provide those rights required by TRIPS Article 16.1.

86. The EC predictably relies on the supposed "substa ntial deference" it is due in interpreting the
Regulation, but any deference simply cannot ignore the plain meaning of the Regulation. The EC
cannot simply substitute TRIPS-cons istent language that it wishes were there. Equally predictable,
since the EC is stretching the meaning of Artic le 14(3) beyond the breaking point, is the EC's
assertion that the United States must prove that the actual language of Article 14(3) is "the only
reasonable interpretation" of that provision and that any interpretation contrary to the TRIPS

51 See citations included at US Second Written Submission, para. 138 (note 120).
52 European Court of Justice Cases 31/86 and 35/86, LAISA v Council, [1988] ECR 2285.
53 Case C-239/99, Nachi Europe v. Hauptzollamt Krefeld , [2001] ECR I-1197; Case C-188/92, TWD
Textilwerke Deggendorf v. Germany, [1994] ECR I-833. Exhibit US-78.

Agreement is "impossible."
56 To the contrary, this Panel's job is to make an objective assessment of
the facts, including with respect to the meaning of Article 14(3). The United States has presented
compelling evidence of what Article 14(3) means. Th e EC has failed to rebut this evidence. Indeed,
the reading of Article 14(3) offered by the EC ignor es the text of the provision. And, in what has
become somewhat of a recurring theme in this disput e, the EC's interpretation is a complete departure
from the definitive guidance offered by the Commissi on on the meaning of Article 14(3) outside of
this dispute, as recently as March 2004. 57 (We note parenthetically that we were at first embarrassed
to learn from the EC's oral statement this morning that we have been citing out-dated guidelines, from
four months ago. Then we looked at the exhibit, and realized that the new guidelines had only been
issued last week. But in any case the relevant la nguage on Article 14(3) is unchanged in the revised
guidelines.). The EC's interpretation is irreconcila ble with the way in which the terms included in
Article 14(3) – reputation, renown and length of use – have been in terpreted by WIPO and the Paris
Union,
58 as well as by the ECJ and OHIM. 59 It is contrary to the understanding of Article 14(3)
expressed by EC member States. 60 And even if the EC is offering a new view of what Article 14(3)
means, we note that the Commission admits that it cannot here commit the EC to "new legal
obligations."61 We have no assurances that at some later date, if the Commission's reading comes
back to haunt it before the ECJ, it will feel free to disown that reading. 62 For these reasons, the Panel
should reject the EC's novel reading of Article 14(3), and further find that even if that reading were
correct, the provision would not be an adequate substitute for Article 16.1 rights.

87. It is worth noting before I move on to Artic le 24.5 that the EC's first response to the
trademark owner's lack of ability to prevent confus ing uses is that "[t]hese concerns are largely
theoretical". This repeated refrain of the EC ignor es the fact that there is no requirement to challenge
a specific application of a measure. That a m easure denies TRIPS Agreement rights to trademark
owners is enough.

Article 24.5 of the TRIPS Agreement

88. I would like now to turn to the EC's ar gument that Article 24.5 of the TRIPS Agreement
permits diminished protection of registered tradem arks. I just want to underscore initially that
Article 24.5 says only what measures adopted to implement the GI Section of TRIPS may not do vis-
a-vis certain trademarks; it does not say what they can do. By its own terms, it does not permit the
elimination of any trademark rights. Further, its cont ext is as an "exception" to GI obligations, not as
an exception to Article 16.1 obligations. It is curious , therefore, that this provision would be used to
justify the non-fulfillment of Article 16.1 obligations.

89. And, indeed, the EC concludes its Article 24.5 argument at paragraph 199 of its oral
statement by stating that, "If the drafters deemed necessary to specify in Article 24.5 that the
implementation of protection for geographical indica tions shall not prejudice the most basic right of
the owner of a registered trademark ('the right to use it'), but not the right to exclude others from using
it, the clear implication is that they did not intend to prevent Members from limiting the exercise of
the latter right in order to allow the use of a geographical indication in co-existence with a

57 Guide to Community Regulations, "Protection of Geographical Indications, Designations of Origin
and Certificates of Specifi c Character for Agricultural Products and Foodstuffs" (Working Document of the
Commission Services issued by the European Commissi on Directorate-General for Agriculture, March 2004),
p. 23. Exhibit US-24.
58 US Second Written Submission, paras. 146-147.
59 US Second Written Submission, paras. 150-152.
62 US Second Written Submission, paras. 158-159, addressing the ECJ's judgment in Petrotub.

grandfathered trademark." 63 In other words, the strongest s upport that the EC can muster for its
interpretation of Article 24.5 – an interpretation that creates an enormous exception to Article 16.1
obligations – is a negative implication. This is a slim reed indeed on whic h to base an exception to
such a fundamental obligation.

90. Our position has been set out in our various written submissions. Briefly, the prohibition
against "prejudice ... [of] the validity of the regi stration of a trademark" preserves the trademark
owner's Article 16.1 rights.
64 This interpretation is supported by the fact that a trademark registration
will be "prejudiced" or damaged if a Member fails to allow the trademark owner to prevent all others
from confusing uses, given that the ordinary meaning of "validity of the registration of a trademark"
refers to the possession of legal authority accorded by virtue of the entrance of a trademark in a
register. This legal authority is defined in Article 16.1. Moreover, because the denial of the right to
prevent confusing uses also prejudices the establishment and maintenance of the trademark's ability to
distinguish goods of one enterprise from those of another, this prejudices its capability of
"constituting a trademark" within the meaning of TR IPS Article 15.1, and thereby further prejudices
the trademark's validity.

91. Further, the additional prohibition in Article 24.5 against "prejudice ... [of] the right to use a
trademark", also encompasses the Article 16.1 righ t to prevent all confusing uses of similar or
identical signs.
65 The interpretation of Article 24.5 presented by the United States, based on the
ordinary meaning of the terms, in context, and in light of the object and purpose of the TRIPS
Agreement, is confirmed by the negotiating hist ory of Article 24.5, which reveals a progressive
evolution in favor of protecting grandfathered trademarks, including through introduction of a
reference to common law trademarks at the same time that the phrase "right to use" was added. 66 By
contrast, as we have stated in our submissions, the EC misreads the text and disregards its context by
interpreting the prohibition on a GI's prejudicing "the right to use a trademark" (on the basis that is it
similar to a geographical indication) as an affirmative right, again by implication, to prejudice the
specific right accorded trademark owners under Article 16.1 to exclude all others from confusing uses
of identical or similar signs. In support, the EC also proposes a far-fetched reading of the negotiating
history for an entirely different provision (Article 24.4). 67 Even if the EC's interpretation of "right to
use" were correct – that is, that it refers only to a ffixing certain signs to goods – the fact that the right
to use those signs should not be prejudiced on the b asis of their similarity with GIs has no bearing on
the other obligation in Article 24.5: the obligat ion not to prejudice the validity of trademark
registrations.

92. I want to emphasize that in its oral statemen t the EC refers once again to a trademark owner's
right to affix a sign. Article 24.5 does not, however, talk about not prejudicing the right to affix signs
to goods; it talks about not prejudicing the right to use a trademark on certain grounds. Trademarks
have certain legal rights associated with them, as reflected in both Articles 16.1 and 15.1. The
purpose of a trademark is to distinguish the goods of one manufacturer from the goods of another.
Signs are just signs. The EC's interpretation ignores this plain text of Article 24.5 and its context.

93. The EC asserts that Article 24.5 is a provision that defines "the boundary between the
protection of trademarks and the pr otection of geographical indications."
68 This is only partially
correct. As an exception to the GI section, it defines only one of several boundaries – i.e., it limits the
scope of GI protection vis-à-vis certain grandfathered trademarks. Article 17, the exception to the

63 Emphasis added.
64 US Second Written Submission, paras. 173-175.
66 US Responses to Panel Question 76, paras. 102-105.
67 US Second Written Submission, paras. 177-187.

trademark section, defines another boundary, by li miting the scope of trademark protection. The
EC's understanding of the role of Ar ticle 24.5 is inconsistent with th e context of an Agreement that
includes separate exceptions for trademark protection and for GI protection.

94. With respect to the fact that Article 24 is entitled "international negotiations; exceptions", the
EC now seems to argue that the context of Article 24.5 – specifically, its placement among
"exception" provisions under a heading entitled "e xceptions" – is irrelevant with respect to
Article 24.5, although the EC acknowledges that it is meaningful for Articles 24.6, 24.7, 24.8, and
24.9, and presumably would not deny that Articles 24.1 and 24.2 relate to international negotiations.
69
The EC implies that the placement of Article 24.5 as part of Article 24 was a drafting error despite the
fact that the drafters correctly positioned other provisions. There is simply no evidence to support this
contention.

95. Finally, the EC apparently contends that Article 24.5 accords additional rights to trademarks
that are not provided by Article 16.1, and that it therefore cannot be regarded as an exception to GI
protection.
70 Now, it is not at all clear how Article 24. 5 accords additional rights to trademarks, since
it simply limits the ability of GIs to prejudice trademarks. But even if it did, this does not take away
from the fact that Article 24.5, by its own terms, acts as a shield for certain trademarks against GIs,
and contains no provisions for limiting trademark rights. There is no rule that a provision that
recognizes one right, such as with respect to trad emarks, cannot be an exception to a separate
obligation, such as with respect to GIs. To th e contrary. Article 24.8, for example, limits GI
protection in light of a person's right to use their own name, even though use of a person's name is not
a form of intellectual property protected elsewhere in the TRIPS Agreement.

Article 24.3 of the TRIPS Agreement

96. With respect to the EC's claim that Article 24.3 requires the EC to maintain in place any
violation of Article 16.1 that existed as of the entry into force of the TRIPS Agreement, the EC
declines to provide any further arguments in it s second written submission. We have already
responded to the EC's argument that Article 24.3 mandates the maintenance of any system of GI
protection, regardless of how contrary it is to othe r WTO obligations. In particular, the United States
has explained that Article 24.3, like Article 24.5, is an exception to the protection of geographical
indications (not trademarks) and that, by its introductory clause ( i.e., "In implementing this Section"),
it limits only actions taken to implement the GI se ction of the TRIPS Agreement, and has no effect on
other sections.
71 The EC, by contrast, implies that the "exception" heading for Article 24 is apparently
the result of a drafting mistake 72 – and not part of the context of the provision – and inexplicably
reads "in implementing this Section" to mean "in implementing this Agreement".

97. Moreover, given that the TRIPS Agreemen t was essentially unchanged between December
1991 and the time it entered into force three years la ter, the EC's interpretation of Article 24.3 would
lead to the absurd result that a Member could have put in place a measure protecting GIs but
containing blatant violations of numerous WTO obligations in the TRIPS Agreement and elsewhere,
and then simply claim that Article 24.3 prevents the WTO-inconsistent measure from being modified.
This is not what the provision says, is not consiste nt with its context, and could not have been what
the Members intended. Indeed, a more logical reading of the text is that the reference to "diminish the
protection of geographical indications that existed" in Article 24.3 is a reference to protection that

69 EC Second Written Submission, paras. 313-314.
71 US Second Written Submission, paras. 188-190.
72 EC Second Written Submission, para. 313 ("Article 24.3 is clearly not an exception"); EC

existed with respect to individual GIs, rath er than to entire systems of GI protection. 73 T h i s
interpretation is confirmed not just by the ordinary meaning, but also by the absurd ramifications that
would result if the phrase were interpreted to apply to systems of protection.

98. Contrary to the EC's arguments, any measures taken to protect GIs at the expense of other
WTO rights before the effective date of the TRI PS Agreement would not re flect bad faith, since
Article 24.3, at least under the EC's reading, would specifically anticipate such measures.

Article 17 of the TRIPS Agreement

99. The EC maintains that the failure of the GI Regulation to accord owners of prior valid
registered trademarks their "exclusive right to prevent all third parties" from confusing uses of
identical or similar GIs, is a "limited exception" justified by TRIPS Article 17.
74 Indeed, the EC
asserts that a system that allows Members "to define in advance ... the conditions for the application
of an exception" has the "advantage of providing greater legal certainty to all parties involved,
including the trademark owners." 75 The United States does not dispute that Article 14(2) of the GI
Regulation provides a great degree of legal certainty – as the trademark owner will always certainly
be unable to exercise its Article 16.1 rights vis-à-vis registered GIs.

100. If a blanket exception, requiring trademark owners to sell their products alongside the
products of an unlimited number of producers using identical or similar signs in a confusing manner,
is considered "limited", then the United States fails to understand how the EC accords "limited" a
meaning providing any protection at all to a tradem ark. The phrase "limited exceptions", used in the
context of TRIPS Article 30, was interpreted by the Canada – Patent Protection panel to "connote a
narrow exception – one which makes only a small diminution of the rights", where "limited" was
"measured by the extent to which the exclusive ri ghts of the patent owner have been curtailed."
76 In
this dispute, the EC has pointed to no true limits on the exception to the exclusive rights that
trademark owners must tolerate under the GI Regu lation. In fact, under the GI Regulation, the
trademark owner is unable to assert its Article 16.1 rights during an unlimited period of time, and
against an unlimited number of producers and products.

101. The EC's response that the trademark owner re tains the right to prevent non-GI holders from
confusing uses of similar or identical signs
77 is not relevant to the fact that they have already been
subject to an unlimited exception. After all, dimi nution of the trademark owner's right to exclude can
result in the loss of trademark rights.78 Nothing in the GI Regulation prevents the possibility of a total
loss of trademark rights – a result that obviously ca nnot be considered "a small diminution of the
rights in question."79

102. While TRIPS Article 17 contemplates some cu rtailment of the rights granted in Part II,
Section 2 of the TRIPS Agreement, the language of Article 17 emphasizes that this curtailment for
any particular trademark should be limited. Ar ticle 17 permits "limited exceptions to the rights
conferred by a trademark"; it does not permit virtually unlimited exceptions to the rights of a limited
number of trademarks. Thus, Article 17 permits li mited exceptions to the rights conferred by a
trademark, such that, as explained by the Canada – Patent Protection panel in the patent context, "the

74 EC Second Written Submission, paras. 336-338.
76 Panel Report, Canada-Patent Protection, paras. 7.30-7.31. See US SWS, para. 201 and note 197.
78 See US Second Written Submission, para. 167 and not e 167, citing German Federal Supreme Court,
Decision 06.12.1990 – Case No. 1 ZR 297/88 ("SL"). (Exhibit US-67).
79 Panel Report, Canada-Patent Protection, para. 7.30.

extent of the acts unauthorized by the right holder that are permitted by [the exception] will be small
and narrowly bounded."
80 This is precisely the type of limited exception that would now be in place
had the EC accepted a proposed amendment by a committee of Parliament that would have
incorporated the substantive disciplines of trademar k law, including the fair use exception thereof,
into the GI Regulation.81 But this amendment was rejected.

103. The EC also points to the specific reference in Article 17 to "fair use of descriptive terms" as
a specified type of "limited exception", and argues that "[i]f 'fair use' of an indication of source
qualifies as a 'limited exception' ... so must be, a fortiori , the fair use of a geographical indication
registered under Regulation 2081/92."
82 As an initial matter, we note that a "descriptive" term is one
that is "characterized by description", where description refers to "[a] detailed account of a ... thing." 83
Registered GIs, by contrast, are a form of intelle ctual property, with associated rights, that are not
merely "descriptive." They are source indicator s that represent "a quality, reputation or other
characteristic of the good [that] is essentially attrib utable to its geographical origin." The EC cannot
fairly assert, therefore, that all registered GI s can, without exception, be considered merely
"descriptive".

104. Further, the EC's argument highlights its erroneous understanding that every use of a
registered GI, regardless of the extent to which it a ffects the rights of a trademark, must be considered
"fair" simply because the GI is registered. Ind eed, the EC did not provide an interpretation of the
phrase "fair use". This is probably because "fair" refe rs to use that is "just", "equitable, impartial."
84
In the copyright context, for example, "[f]air u se involves a balancing process by which a complex of
variables determine whether other interests should override the rights of the creators." 85 The EC fails
to explain how a blanket and unlimited exception to Article 16.1 rights for owners of all trademarks
that are similar or identical to registered GIs ca n, in every situation, be considered "just" or
"equitable", or how trademark owners are accorded the benefit of a "balancing process". After all, the
"fair use" must be a "limited exception".

105. Finally, the EC has not demonstrated that the GI Regulation takes into account the "legitimate
interests" of third parties or of the trademark owner. For example, by diminishing the trademark
owner's Article 16.1 rights, the GI Regulation results in consumer confusion, which is certainly not in
their "legitimate interests". Nor are the legitimate interests of a trademark owner respected through a
blanket exception that benefits GI right holders without any regard for the trademark owner.

Conclusion

106. Before I conclude, I want to note that, as we listened to the oral statement of the EC this
morning, we found that in most paragraphs in wh ich the EC discusses a US argument or an exhibit,
the EC's characterizations were inaccurate or misleading. For example, the EC implies that Hungary's
ministerial reasoning with respect to its GI law has no relation to the EC GI Regulation, because that
law applies only to products not covered by the EC GI Regulation. But the fact is that Hungary had to
change its law upon accession to render it consistent with the EC GI Regulation and, in doing so,

80 Panel Report, Canada-Patent Protection, para. 7.45.
81 See US First Oral Statement, at para. 75, citing Opinion of the Committee on Legal Affairs and the
Internal Market for the Committee on Agriculture a nd Rural Development on the proposal for a Council
regulation amending Regulation (EEC) No 2081/92 on the protection of geographical indications and
designations of origin for agricultural products and foodstuffs, European Parliament, 2002/0066(CNS) (10
September 2002), pp. 13-14. Exhibit US-21.
83 The New Shorter Oxford English Dictionary, p. 644. Exhibit US-79.
84 The New Shorter Oxford English Dictionary, p. 907. Exhibit US-79.
85 Black's Law Dictionary (Abridged Sixth Edition 1991), p. 415. Exhibit US-80.

made clear that Article 14(3) provides protection to well-known marks. That reasoning, therefore, is
directly pertinent to the EC GI Regulation and not in the least irrelevant. Similarly, the EC claims
that its GI Regulation guidelines merely "repeat [] verbatim the wording of Article 14(3)" and
therefore does not support the U.S.'s reading of that ar ticle. But this is untrue. In fact, the guidelines
emphasize that conflicting trademarks do not prevent the registration of GIs "as a general rule"; that
Article 14(3) represents the "only" circumstance in wh ich this is not true; and that "in all other cases,
the name can be registered notwithstanding the exis tence of the registered trademark." While this
explanation is entirely consistent w ith any good-faith reading of Article 14(3), it is not in any sense a
verbatim repetition.

107. You will be happy to hear, in light of the hour , that we considered, but rejected, the idea of
rebutting each of the EC's misrepresentations paragra ph by paragraph. Instead, we simply want to
point out this aspect of the EC statement to the Pa nel, note several examples, both here and earlier in
our statement, and strongly suggest that the Pane l examine the source material – and not just the
representations in the oral statements of the parties – as they consider the parties' arguments.

108. To conclude, as I said at the outset, we brought this dispute – after five years of fruitless
consultations – because the EC GI Regulation provi des significant commercial benefits to products
and persons receiving GI status under the Regulatio n, but imposes prohibitive barriers to access to
these benefits on non-EC products an d persons. It also provides those significant benefits to EC
persons and products at the expen se of owners of prior registered trademarks, who are supposed to
have certain rights associated with their trademar ks under the TRIPS Agreement. We therefore ask
that the Panel find that the EC GI Regulation is inconsistent with the EC 's obligations under the
TRIPS Agreement, the Paris Convention, and the GATT 1994, as set out in our written submissions
and oral statements in this proceeding.

109. Thank you very much for your attention and fo r your hard work in analyzing the claims and
arguments of the Parties in this dispute. We wo uld be happy to answer any questions the Panel may
have.

ANNEX A-7

CLOSING STATEMENT OF THE UNITED STATES
SECOND SUBSTANTIVE MEETING

(12 August 2004)

1. Thank you, Mr. Chairman and members of the Pa nel. We appreciate your hard work over the
past two days.

2. As the EC suggested in its closing statement, it is true that this case has become fairly
complicated, although it started off fairly simple and straightforward. Our legal claims were based on
a simple problem: An EC GI Regulation that benef its EC persons and products to the detriment of
non-EC persons and products and to the detriment of trademark rights. The EC GI Regulation
purports to provide significant economic and compe titive benefits for persons and products receiving
GI status, but then effectively reserves those benef its to EC persons and products, erecting prohibitive
barriers to access to those benefits for non-EC pe rsons and products, and pr otecting EC persons and
products from competition from non-EC persons and products.

3. This relatively simple case became complic ated because the EC, in order to defend itself
against rather straight-forward WTO inconsistencies, threw one complicating factor after another into
the mix. It is difficult to try to explain that th e Regulation does not mean what it says, and that is
where the complications come in. For instance, for the EC to defe nd against our claims, the meaning
of the Regulation had to be seriously contorted so that, for instance, a relatively straightforward and
WTO-inconsistent requirements of equivalence and reciprocity has to, somehow, be read out of the
Regulation. Where it is clear that the EC GI Regulation prevents trademark owners from exercising
rights guaranteed by Article 16.1 of the TRIPS Agreement, the EC has to explain somehow why
trademark owners have no need of those rights – when, of course, they do – and has to devote long,
complicated arguments to explaining how the Regul ation blocks the regist ration of any and all
confusing GIs, when in fact, by its own terms, it does not and cannot. The EC also has to try to
explain how numerous and vague unfair trade statut es, labeling requirements, deceptive advertising
rules and the like somehow make up for the lack of Article 16.1 rights. They, of course, do not, but
attempting to explain that they do is complicated. That is why this relatively straightforward case has
become complicated.

4. I will divide my closing remarks into two general categories – national treatment/MFN, and
trademark rights.

National Treatment/MFN

5. On the issue of reciprocity and equivalence in Article 12(1) of the GI Regulation, there is
obviously a disagreement between the complainants a nd the respondent on the facts, that is, on the
meaning of the GI Regulation. The EC claims th at it is entitled to "considerable deference", a
standard that is not in any WTO agreement or any dispute settlement report. The EC's apparent hope
is that the Panel will not make factual findings based on the evidence, but will simply adopt wholesale
the EC's interpretation of the Regulation. But it is the task of this Panel to make an objective
assessment of the facts concerning this measure and what it means. The Panel must determine if there
is a solid evidentiary basis for a factual finding that reciprocity and equi valence conditions do not
apply to non-EC WTO Members, and that, in fact, there is a mechanism in the GI Regulation for
registering and protecting GIs of other WTO Members without those conditions. As the United States
has said before, and I will repeat again today, the United States would welcome a finding based on
authoritative domestic legal instruments that the GIs of other WTO Members can be registered

without the WTO Members satisfying those conditions. But, on the basis of the evidence that we
have seen, we have no confidence that this is the c ase, or that the European Court of Justice would
agree with the EC's interpretation in this dispute.

6. With respect to whether the GI Regulati on discriminates against nationals, the EC has
effectively argued that, somehow – because of the special nature of the TRIPS national treatment
requirement, and because there is also a GATT Articl e III national treatment requirement with respect
to goods – unless a measure literally and specifically states the word "national" in connection with
less favorable treatment, there can be no TRIPS national treatment violation. Although the
Regulation itself does not use the word "national", it does everything but. And, indeed, the preamble
to last year's amendments does use that word in admitting that the distinctions made in the Regulation
are based on nationality. Without repeating all of the details we have argued elsewhere, the
distinctions made in the Regulation between the EC track and the non-EC track for GI Registrations
(and objections) correspond extremely closely, if not exactly, to nationality. Simply stated, non-EC
nationals are on a different track than EC nationa ls, and that non-EC different track provides much
less favorable treatment than the EC track.

7. Does the differential treatment also correspond to the origin of the product? Yes, it does.
There is an overlap. And this overlap may well be more pronounced in the case of geographical
indications than in the case of other forms of intell ectual property rights. But the fact that the GI
Regulation discriminates against non- EC products, should not and does not detract from the fact that
it also provides less favorable treatment of non-EC nati onals as well. There is absolutely no basis in
any principle of treaty interpretation that would justify a narrow, technical reading of the TRIPS
Agreement national treatment obligation, simply because the measure is also covered by the GATT
1994 Article III national treatment obligations. GATT Article III is simply not an excuse for whittling
down the TRIPS Agreement national treatment obligation to virtually nothing.

8. The EC argument that the less favorable treatment is based on where a person is established
and producing GI products and not on that person's nationality simply does not hold up. Nor does the
EC's claim, which we just heard in the EC's closing statement, that the "foreign" and "domestic"
registration tracks are simply a matter of "drafting" differences. The simply truth is that, because of
the two "tracks", EC nationals have direct means to avail themselves of GI protections in the EC, and
non-EC nationals do not.

Inspection Structures

9. With respect to the unilateral imposition of inspection structures on other WTO Members, the
EC would like the issue to be "what is wrong with the EC's inspection structure system?" So, the EC
jumped gleefully on my statement yesterday that th eir inspection system is "fine". What I meant was
that it was fine for the EC. What we object to, and what is contrary to the WTO agreements, is
imposing that particular structure on us as a prec ondition to our products a nd persons receiving GI
status in the EC. What if we, too, established a inspection system for protection of GIs in the United
States, and then imposed that inspection system on th e EC as a condition to protecting EC GIs? What
if the inspection system that we imposed were incomp atible with the EC's system? What if all of the
WTO Members did the same thing: developing particular inspection systems for themselves and
requiring other WTO Members to adopt the same sy stems? How many competing and incompatible
inspection structures can one WTO Member establish in its territory before its entire system becomes
unworkable? That is one reason that the issue is not "what is wrong with the EC inspection system",
but "why is the EC justified in imposing that system on other WTO Members."

10. Further, the EC says that its inspection stru cture is product-specific. This statement is
misleading and inaccurately dismisses the broad scope of the requirement in Article 10 of the GI
Regulation, which requires that an inspection structure
 be established by the WTO Member, and that,

under that structure, particular inspection bodies
 may be authorized to conduct inspections. Further,
these inspection structure requirements have nothing to do with whether the products satisfy the
substantive criteria of the Regulation; we are not in this dispute challenging the requirements that a
product must meet in order to claim GI status.

Government Involvement

11. We have already explained why it is WTO-in consistent for the EC to require other WTO
Members to assess whether GI applicants comply with the requirements of the EC GI Regulation and
to do the EC's work for it. During this meeting, and for the first time to this degree, the EC focuses on
TRIPS Article 24.9, which provides that Members need not protect GIs not protected in the country of
origin. The EC uses this provision to support its proposition that the TRIPS Agreement itself permits
the EC to require that other WTO Members assess th e GI applications of its nationals and transmit
those applications to the EC. According to the EC, only the WTO Member government, and not the
individual rightholder, is in a position to show that the GI is protected in the country of origin.

12. But we ask the Panel to consider this argument carefully. The EC's assertion is perhaps true if
a WTO Member has an EC-style GI protection system, with a central list of protected GIs maintained
by the government. But, as indicated by several WIPO publications we have cited in this proceeding,
WTO Members protect GIs in a number of ways, including through certification or collective marks,
unfair trade statutes, and the like. Further, some WTO Members have common law certification and
collective mark systems, in which the marks are not maintained on any central register. For all of
these Members, perhaps unlike the EC, the government is not in a better position than the rightholder
to provide information that the GI is protected in its country of origin. Therefore, implicit in the EC's
argument – and in the requirement that the WTO Member government and not the rightholder show
that the GI is protected in the country of origin – is the assumption that, in order to have their GIs
protected in the EC, other WTO Members must have a system of GI protection that is similar to the
EC system. This requirement is a "back-door" way of imposing an EC-style system of GI protection
on other WTO Members.

13. Further, the EC characterizes its requirement that other WTO Members process GI
applications as "cooperation". I know why th ey call it "cooperation": who can be against
cooperation? But this is not cooperation. The EC is forcing other sovereign WTO Members to
subject themselves to the EC's requirements and fo rcing other WTO Members to do the EC's job for
it, as a condition of receiving GI status for its persons and products. That is not cooperation.

Article XX(d) of the GATT 1994

14. The EC's second submission contains the EC's only substantive argument on Article XX(d) of
the GATT 1994. It went on for several pages; clearly some work went into it. Yet, the EC's argument
was that the WTO-inconsistent requirements al leged by the United States are necessary for the
"attainment of the objectives" of the Regulation or "indispensable for the implementation" of the
Regulation. But we have to be much more rigor ous than this when considering whether a Member
has satisfied the strict conditions for an excepti on to basic WTO obligations. An examination of
previous disputes discussing these exceptions – such as Korea – Beef – shows the level of rigor and
analysis that is appropriate for this analysis . In brief, the requirement under the GATT 1994
Article XX(d) is that a WTO-inconsistent measure must be "necessary to secure compliance
" with a
WTO-consistent law or regulation. This require ment cannot be glossed over or swept under the
carpet. It is simply irrelevant under GATT 1994 Article XX that a measure is necessary for the
objectives of a regulation, or indispensable to th e implementation of a regulation. It must be
necessary to secure compliance with a WTO-consistent regulation.

15. I heard a brief conclusion in the EC's clos ing statement that these requirements are necessary
to ensure that a product meets the specifications. But it is not clear that the specifications are a
regulation, or in what sense the specifications – if they are the regulation the EC has in mind – are
WTO-consistent. In short, the EC has not even made a credible attempt to support its case for
entitlement to an Article XX(d) exception, because it has not even shown that the WTO-inconsistent
requirements secure compliance with a WTO-consistent regulation. And, of course, we have already
described in our oral and written submissions why these requirements are not in any sense
"necessary".

Trademarks

16. While our claims with respect to trademar ks are separate from our national treatment and
MFN claims, the theme is the same: through GI regi stration, the EC gives its nationals protection
against the trademark rights of all
 trademark owners under the TRI PS Agreement, including non-EC
nationals.

17. Several points in our discussions today are worth highlighting. Notably, the EC continues to
maintain that, presumably in satisfaction of his TRIPS Article 16.1 rights, the trademark owner has
full rights to challenge and cancel a GI registration, by alleging inconsistency with Article 14(3) of the
Regulation. We are not sure that this "right", if available, is responsive. But since we had a
considerable amount of new discussion of this issue dur ing this meeting, some comments are in order.
First, Article 16.1 requires that the trademark owne r be able to prevent confusing uses of a GI.
Cancellation of an entire GI might or might not be necessary to do this. It seems wholly unrealistic,
for instance, that the owner of a trademark in one EC member State would be able to convince the
ECJ that an entire EC-wide GI should be cancelled, si mply to avoid a particular confusing use in his
local market. In this case, particularly, the s upposed opportunity to "cancel" a registration is an
inadequate substitute for the ability to prevent confusing uses.

18. Second, the EC had initially suggested to th e Panel that a trademark holder could challenge
the registration directly, presumably under Article 230 of the EC Treaty. In response, we pointed out
that any such challenge would have to be made within two months from the registration, and that,
after that point, the trademark owne r would be powerless to challenge the registration, even through
an "indirect" challenge in EC member State courts . The EC now responds, contrary to its earlier
suggestions, that trademark owners might not
 be able to satisfy the "directly and individually
concerned" standing requirement for challenging the registration under Article 230, raising the
possibility that some trademark owners might be able to challenge the registration after the two-month
deadline expires. At least in the case of identi cal signs for identical goods, it would seem that the
trademark owner would be directly and individually concerned. But not even the EC is claiming that
no trademark owners would be considered directly and individually concerned. Therefore, even under
the EC's approach, not all trademark owners would have the opportunity to challenge the registration
after the two-month deadline (and, indeed, it may be that none would have that opportunity).
Consequently, it cannot reasonably be asserted th at no trademark owners will be barred from
challenging GI registrations after tw o months. Third, those trademark owners, if any, not prevented
from challenging the registration after the two-mont h deadline expires, would not be entitled to a
referral to the ECJ, which is in the discretion of the courts. Finally, it appears that none of the GI
registrations pursuant to accession protocols is subject to challenge at all.

19. And in any case, the substantive standard that would be applied by the court under
Article 14(3) is more strict than that required under TRIPS Article 16.1. Article 14(3) provides for the
rejection of a GI Registration where it is likely to mislead the consumer in light of the trademark's
reputation, renown and length of time used. That is not
 the standard under Article 16.1, which only
requires confusion. The EC says that the confusio n analysis always involv es the consideration of

renown, but that is not true. For example, wh ere there are identical signs for identical goods,
reputation, renown, and length of time will be irrelevant.

Article 24.5 of the TRIPS Agreement

20. The EC points to the supposed difference be tween the United States and Australia regarding
Article 24.5 with respect to the Article 24.5 phrase "r ight to use a trademark". Regardless of whether
this is true, however, there is no difference with re spect to the main issue: that Article 24.5 says that
measures to implement the GI section shall not pr ejudice the eligibility for or the validity of the
registration of a trademark, and that Article 16.1 re quires that owners of such registered trademarks
have certain rights. Further, even if the EC is right that Article 24.5 prevents Members from
prejudicing the right to put "signs" on goods, this does not give license to prejudice rights guaranteed
under Article 16.1 to prevent confusing uses of signs. We urge the Panel to be very careful not to
read away important Article 16.1 rights through a negative implication, particularly one arising from a
misreading of Article 24.5.

Article 24.3 of the TRIPS Agreement

21. We find it extraordinary that the EC complains that our reading of Article 24.3 would mean
that trademark owners have more rights after the TRIPS Agreement comes into force than they had
before the TRIPS Agreement came into force. That is the whole point of Article 16.1 of the TRIPS
Agreement. That's why we signed the TRIPS Agreemen t. In contrast, the EC says that whatever GI
protections were in place when the TRIPS Agreement came into effect cannot be changed, regardless
of whether they are consistent with other TRIPS Ag reement or WTO obligations. This reading is not
supported by the text and is not what the negotiators intended. Further, we do not understand the EC's
point that our reading of Article 24.3 discriminates against those with registration systems in place on
the date the TRIPS Agreement came into force. Article 24.3 does not identify any particular system
for the protection of GIs. That provision merely says that whatever protection was provided to GIs –
regardless of system – cannot be diminished in implementing the GI section of TRIPS.

Article 17 of the TRIPS Agreement

22. Under Article 17, there is a difference betw een using a place name to describe a product and
using a GI in a trademark sense to differentiate and encourage consumers to buy the product. Use of a
GI in a promotional sense by an unlimited number of people, over an unlimited amount of time and
for nearly unlimited uses cannot be justified as a li mited exception under Article 17. Further, this, by
definition, allows consumers to be confused, which is not in the interest of either trademark owners or
consumers.

Conclusion

23. We sincerely thank the Panel. We know this has been a long and complicated two days, and
that we have generated a lot of pape r over the course of this dispute. But I do agree with the EC that
these past two days have elucidated many issues. While the EC and we still do not agree on many
issues, we at least have a better sense of where we disagree. Thank you.

ANNEX A-8

REPLIES BY THE UNITED STATES TO QUESTIONS POSED BY THE PANEL
FOLLOWING THE SECOND SUBSTANTIVE MEETING

(26 August 2004)

Q94. The Panel takes note that, in the EC's view, the specific conditions cont ained in Article 12(1)
of Regulation (EC) No. 2081/92 do not apply to WTO Members because the introductory phrase
"[w]ithout prejudice to international agreements" ensures that the WTO agreements prevail where
there is a conflict with the Regulation (EC rebuttal, para. 55). Which precise EC obligations under
the WTO agreements would be prejudiced by the a pplication of those specific conditions to other
WTO Members? In particular:

 (a) would the EC's obligations under Artic le III:4 of GATT 1994 be prejudiced?

 (b) would the EC's obligati ons under Article 3.1 of the TRIPS Agreement be prejudiced?

If not, please explain the relevance of your referen ce to the fact that the TRIPS Agreement obliges
WTO Members to provide protection to GIs in acco rdance with Section 3 of Part II and the general
provisions and basic principles of the TRIPS Ag reement (EC first written submission, paras.65-66).
EC

Q95. Can the EC provide the Panel with any offic ial statement by the Commission or any other EC
institution, that the application of conditions of reciprocity and equivalen ce, such as those under
Article 12(1) of Regulation (EC) No. 2081/92, would be inconsistent with the EC's obligations under
international agreements, in particular, the WTO Agreement? EC

Q96. The EC has provided a revised Guide to Regulation (EC) No. 2081/92, dated August 2004
(Exhibit EC-64). Was this new version prepared in connection with this Panel proceeding? How is it
relevant to the Panel's work if the Commission assu mes no liability for its contents (see its cover
page)? A new paragraph in the introduction (page 5) indicates that "the Commission reserves the
right to amend procedures" and indicates the possibility of further possible revisions. Does this mean
that the Guide could be changed back to the old version? EC

Q97. The Panel takes note of the EC's respon ses to Panel questions nos. 16 and 17 and the EC's
rebuttal, paras. 79-86. Plea se explain in detail how the Co mmission's interpretation that
Article 12(1) of Regulation (EC) No. 2081/92 does not apply to WTO Members is consistent with the
statements in the EC responses in the TRIPS Council review of legislation to question No. 4 posed by
New Zealand and the follow-up question posed by India on page 24 in IP/Q2/EEC/1 (cited in
Australia's rebuttal, para. 33, fn. 23). EC

Q98. Is it the EC's submission that the conditions in Article 12(1) of Regulation (EC) No. 2081/92
do not apply to WTO Members so that:

 (a) WTO Member nationals may obtain GIs fo r areas located in all countries; or

 (b) persons from all countries may obta in GIs for areas located in all WTO
Members? EC

Q99. The EC has referred to other Community le gal acts in relation to the meaning of the phrase
"without prejudice to international agreements" (E C rebuttal, paras. 62-66). Please also refer to
Regulation (EC) No. 2082/92 on certificates of spec ific character for agric ultural products and
foodstuffs, which was adopted with the Regulation at issue in this dispute. To what international
agreements does the phrase "[w]ithout prejudice to international agreements" refer as used in
Article 16 of that Regulation? EC

Q100. In Regulation (EC) No. 753/2002 on wine (set out in Exhibit US-35), Articles 34-36 refer to
"third countries", apparently to refer to both WTO and non-WTO Members. It expressly states
wherever a "third country" is limited to, or excludes, WTO Members. Why was Regulation (EC)
No. 2081/92 drafted in such a way that the meaning of "third country" in Articles 12 through 12d is
not clearer each time it was used? Does the use of "WTO Member" together with "third country" in
certain instances in Articles 12 through 12d of Regula tion (EC) No. 2081/92 not suggest that the term
"third country" excludes WTO Members in those articles? EC

Q101. The Panel takes note of the parties' respec tive views on the meaning of "nationals" under the
TRIPS Agreement and the Paris Convention. Withou t prejudice to those view s, please explain in
detail which nationals should be compared for the purposes of the TRIPS national treatment
obligations, based on the text of the agreement.

 Please refer to the quadrant in the third party submission of Chinese Taipei (para. 9). Both
the EC and the US compare an EC national with rights to a GI located in the EC. On the US view,
that national should be compared with a US national with rights to a GI located in the US. But on
the EC view, that national should be compared with a US national with rights to a GI located in the
EC. Would it be appropriate instead to compare a ll EC nationals with rights to GIs who might wish
to register them under Regulation (EC) No. 2081/ 92, wherever the geographical areas are located,
and compare them with all US nationals with rights to GIs who might wish to register them under the
Regulation, wherever the geographical areas are located?

 More generally, is there a principle in the TRIPS Agreement that all nationals of one WTO
Member with rights to a particular category of intellectual property, such as GIs, should be compared
with all nationals of other WTO Members with rights to the same category of intellectual property,
unless the text of the agreement indicates that with respect to particular types of products or other
sub-categories, they require particular treatment? USA, AUS, EC

Response:

1. As the United States understands it, the quadrants referenced by the Panel refer generally to
four situations that might arise with respect to nationals and the protection of geographical
indications: (1) an EC national claiming rights to a GI that refers to a territory in the EC ("EC-based
GI"); (2) a non-EC national claiming rights to an EC -based GI; (3) an EC national claiming rights in a
non-EC-based GI; and (4) a non-EC national claiming rights in a non-EC-based GI. Graphically, this
is presented in four quadrants as follows:

GI: EC
National: EC
 1

GI: Non-EC
National: EC
3

 2
GI: EC
National: Non-EC

4
GI: Non-EC
National: Non-EC

2. As the Panel notes, in explaining the nationa l treatment inconsistency, the United States has
often illustrated the problem by comparing the treat ment accorded in quadran t 1 – that accorded EC
nationals claiming rights in EC-based GIs – to the treatment accorded in quadrant 4 – that accorded
non-EC nationals asserting rights in non-EC GIs. Because of the close link between a GI and the
territory to which it refers,
1 and a similarly close link between a territory and one's nationality, it
stands to reason that discrimination based on the territo ry to which the GI refers effectively results in
discrimination based on nationality. This is re flected in the comparison between the treatment
accorded in quadrant 1 to the treatment accorded in quadrant 4.

3. This said, and addressing the Panel's question, it is appropriate to compare the treatment
accorded to all EC nationals seeking to protect GIs, regardless of location, to all non-EC nationals
seeking to protect GIs, regardless of location, as su ggested by the Panel. This comparison arrives at
the same result as that argued by the United States. The text of Article 3.1 of the TRIPS Agreement
requires the EC to accord to the nationals of non- WTO Members "treatment no less favorable than
that it accords to its own nationals with regard to the protection of intellectual property." The
question presented by the text, therefore, is whether the EC accords any treatment to non-EC nationals
with regard to the protection of rights in geographi cal indications that is less favorable than that
accorded to any EC nationals. In other words, is any treatment accorded to any non-EC nationals in
quadrants 2 and 4 less favorable than that accorded to any EC nationals in quadrants 1 and 3?

4. This question can be refined somewhat, because the most favorable treatment accorded to EC
nationals – and that accorded to most, if not all, EC nationals – is in quadrant 1. That is because, as
the EC itself admits, the EC nationals in quadrant 2 (those claiming GIs outside the EC), may face the
same obstacles as non-EC nationals claiming GIs out side the EC. Therefore, the treatment in
quadrant 1 is the benchmark – the national treatment – against which treatment of non-EC nationals
must be measured. If treatment accorded to any n on-EC nationals – in quadrants 2 or 4 – is less
favorable than that accorded to any nationals in quadrant 1, then there is a violation of the national
treatment obligations. It does not matter whether some EC nationals – those in quadrant 3, to the
extent there are any – are also treated less favorably than the EC nationals in quadrant 1. The issue is
whether non-EC nationals are accorded less favorable treatment than that accorded EC nationals, not
whether some EC nationals are also unable to get that same best treatment as other EC nationals.
2

1 As the United States has noted previously, GIs are unique among intellectual property rights in its
close link to territories and borders. See, e.g., US Response to Panel questions 24-27 (July 8, 2004).
2 In this connection, as the United States pointed out in its first written submission, at paragraph 76, the
national treatment obligation with respect to goods under Article III of the GATT 1994 has been found to
require "treatment of imported products no less favorable than that accorded to the most-favoured domestic
products." US – Malt Beverages , paras. 5.17, 5.33 (emphasis added). Furthermore, the United States pointed
out in the first written submission, by an alogy, that the tr eatment accorded to the most favored EC nationals is
that accorded in quadrant 1. See US – Section 211 , where the Appellate Body found that "as the language of
Article 3.1 of the TRIPS Agreement, in particular, is similar to that of Article III:4 of the GATT 1994, the

5. As the Panel notes, the EC relies on the exis tence of quadrant 2 to claim that some non-EC
nationals are accorded the same treatment as EC nati onals. But the fact that some non-EC nationals
(however few in number) might be accorded the same treatment as EC nationals in quadrant 1 does
not detract from the fact that, compared to the non-EC nationals in quadrant 4, there is less favorable
treatment. A national treatment breach is not cured simply because some non-EC nationals may be
treated the same as EC nationals, or because some EC nationals may be treated worse than others.
That there are situations – in this case, an overw helming number – in which the treatment accorded to
non-EC nationals is less favorable than that accord ed to EC nationals is sufficient to establish a
national treatment breach.
3

6. A similar analysis would apply with resp ect to the Paris Convention national treatment
obligation in Article 2(1), which provides similarly that "[n]ationals of any country of the Union shall,
as regards the protection of industrial property, enjoy in all other countries of the Union the
advantages that their respective laws now grant, or may hereafter grant, to nationals ..."

7. The Appellate Body has found less favorable treatment of other WTO Member nationals
under Article 3 of the TRIPS Agreement based on the denial of "effective equality of opportunities" to
those nationals. In the context of GIs, "effectiv e equality of opportunities" for non-EC nationals
requires that persons in quadrant 4 be accorded treat ment as favorable as that accorded to persons in
quadrant 1. The EC GI Regulation denies such treatment. Consider the simple example of two sets of
nationals, one group of EC nationals in France claiming GI rights with respect to their cheese in a
particular region in southeastern France, and one gr oup of Swiss nationals claiming GI rights to their
cheese over the border in a particular region of Swit zerland. By providing a ready avenue for the
French nationals to register and protect their ch eese GI in the EC, but making it considerably more
difficult, if not impossible, for those Swiss nationals to register and protect their comparable cheese
GI, the EC is plainly denying "effective equalit y of opportunities" for those Swiss nationals and
according those Swiss nationals less favorable treatment with regard to the protection of intellectual
property than it is according the French nationals.

8. With respect to the Panel's more general ques tion, the text of the TRIPS Agreement is clear
that the Article 3.1 analysis requires comparisons of treatment based solely on nationality with respect
to "a particular category of intellectual property."
4 Moreover, nothing in the text of the TRIPS

jurisprudence on Article III:4 of the GATT 1994 may be useful in interpreting the national treatment obligation
3 Similarly, the panel in US – Section 337 concluded that "the 'no less favorable' treatment requirement
of Article III:4 has to be understood as applicable to each individual case of imported products . The Panel
rejected any notion of balancing more favorable treatment of some imported products against the less favorable
treatment of other imported products. If this noti on were accepted, it would entitle a contracting party to
derogate from the no less favourable treatment obligation in one case, or indeed in respect of one contracting
party, on the ground that it accords more favourable trea tment in some other case, or to another contracting
party. Such an interpretation would lead to great uncertainty about the conditions of competition between
imported and domestic products and thus defeat the purposes of Article III ." Panel Report, US – Section 337 ,
para. 5.14 (emphasis added).
4 To suggest that one make comparisons based on nationality with respect to different intellectual
properties (e.g., treatment of national A with respect to patents compared to treatment of national B with respect
to copyrights) is not only illogical, but is also inconsistent with the text and context of TRIPS Article 3. For
instance, the second sentence of Article 3.1 refers to limitations to the national treatment obligation when
comparing treatment of nationals with respect to related ri ghts. The same is true fo r TRIPS Article 4, in which
subparagraphs (b) and (c) of Article 4 refers to exceptio ns to the MFN obligation when comparing treatment of
nationals with respect to copyright and related rights. Thus the text and context of both Articles 3 and 4 make
clear that any analyses under these provisions requires comparisons of treatment based on nationality with
respect to "a particular category of intellectual property."

Agreement suggests that comparisons be made with respect to both nationality and "a particular type
of products or other sub-categories." One could read the EC's argument as suggesting just such an
analysis, i.e., quadrant 1 (EC nationals with EC-based GI s) can be compared only with quadrant 2
(non-EC nationals with EC-based GIs), not with quadrant 4 (non-EC nationals with non-EC-based
GIs). Yet there is simply no basis, textual or ot herwise, to limit the national treatment obligation
under TRIPS to this or any other sub-category of a pa rticular intellectual property. The same is true
for a TRIPS Article 4 analysis.

Q102. Is it safe to assume that persons resi dent or established in one country to produce
agricultural products or foodstuffs will be considered "nationals" of that country for the purposes of
TRIPS? Why is it, or is it not, safe to assume that applicants for GIs under Regulation (EC) No.
2081/92 are "nationals" of the country where their GI is located, for the purposes of TRIPS? USA,
AUS, EC

Response:

9. As an initial point, as illustrated above in res ponse to question 101, it is not critical for the
Panel to make a factual assumption that all persons producing GI products in a country are nationals
of that country. Indeed, it is undisputed that th e EC GI Regulation on its face provides for different
treatment of persons depending on which quadrant set out in response to question 101 they fall in.
5
Further, it is clear that, under the GI Regulation, there is less favorable treatment accorded to non-EC
nationals in quadrant 4 than is accorded to EC nati onals in quadrant 1. Consequently, there is a
breach of national treatment obligations on the face of the EC GI Regulation, whether or not one
makes assumptions concerning all persons producing GI products in a country

10. This said, applicants for a GI Registration are groups of producers and/or processors, natural
persons and legal persons that apply for registration with resp ect to agricultural products or foodstuffs
that they produce or obtain within a specific geographic area.
6 In order to produce or process
agricultural products and foodstuffs in a particular geographic area, such persons will be established
in that area and will have to set up a legal person under the laws of the country in which they are
established and producing agricultural products and foodstuffs.7

11. Therefore, to the question whether it is saf e to assume that such persons, established and
producing agricultural products and foodstuffs in a country, are "na tionals" of that country for
purposes of the national treatment obligation of th e TRIPS Agreement and the Paris Convention, the
answer is, generally, yes. First, any real and effective commercial or industrial establishment in a
separate customs territory WTO Me mber would, under Article 1.3, footnote 1, of the TRIPS
Agreement, be a national of that WTO Member . Second, persons established and producing
agricultural products and foodstuffs in any WTO Member that confers nationality on the basis of such
establishment would necessarily be nationals of th at WTO Member. Third, under Article 3 of the
Paris Convention, even a national from a non-Paris Un ion country is treated as a national for national
treatment purposes if it has a real and effective co mmercial establishment in a Paris Union country.
Fourth, as the EC has itself noted, for legal persons, a country's "nationals" are often defined in terms
of where that company is incorporated. As the EC has itself unwittingly illustrated in its examples of
so-called non-EC nationals taking advantage of EC GIs, companies established and producing
agricultural products and foodstuffs in a country generally become incorporated in that country and

5 Moreover, the EC has not argued, as indeed it cannot, that there are no persons falling in quadrant 4.
6 Articles 5(1), 5(2) and 12a(1) of the GI Regulation.
7 See Article 2, Regulation 2037/93, which states: "Where national law treats a group of persons
without legal personality as a legal person, the said group of individuals shall be authorized to submit an
application." Exhibit Comp.-2a.

are therefore nationals of that country.
8 Finally, and as context, the United States notes that nationals
are defined in Article 1.3 of the TRIPS Agreement to include natural or legal persons that would meet
the criteria for eligibility of protection provided for in the Paris Convention. Article 10 of the Paris
Convention defines "interested parties" in indicati ons of source as including those natural or legal
entities engaged in production of goo ds established either in the locality falsely indicated as the
source, or in the country where the false indication of source is used.

12. In other words, it will generally follow as a legal matter that those established and producing
agricultural products and foodstuffs in a Member ar e nationals of that Member; it also generally
follows as a practical matter. In fact, the United St ates is unaware of any GI registrations granted to
applications from a non-EC national for the protecti on of an EC GI. Nor has the EC provided any
such examples. Instead, as noted above, the EC has simply provided examples of situations in which
non-EC nationals have some involvement in companies that are EC nationals producing EC GI-
protected products. Further, as the United States has pointed out, US agricultural land is held almost
exclusively by US nationals.
9

13. Finally, as noted previously, there is an ex tremely close fit between a distinction based on
where a legal person is established and produci ng agricultural products and foodstuffs and a
distinction based on nationality. The Panel therefore should find that, by discriminating against those
established and producing products outside the EC , the GI Regulation discriminates against non-EC
nationals.

Q103. The Panel takes note that the EC does not exclude entirely that "under certain circumstances,
measures which are neutral on their face may non etheless constitute less favourable treatment of
foreign nationals" and that the EC believes that national treatment under TRIPS should not overlap
with GATT 1994 (EC response to Panel questi on No. 29, paras.71 and 74). What other
considerations are relevant to th e assessment of de facto discrimination under TRIPS? What is the
relevance, if any, of the fact that the TRIPS Agreement does not contain a general exceptions
provision analogous to Article XX of GATT 1994? USA, AUS, EC

8 The EC has cited several purported examples of non-EC nationals claiming rights in EC-based GIs.
However, these examples confirm the co ntrary proposition. In its oral statement at the second meeting, at
paragraph 8, the EC cited the examples of Sara Lee, Kr aft Foods, and Nestle. In the "Sara Lee" example, it is
apparent from the EC's own Exhibit EC-61 that the transactions did not involve non-EC nationals. Exhibit
EC-61 contains the decision of the Commission not to oppose, inter alia, the acquisition of Al Ponte Prosciutto,
S.R.L. by Sara Lee Personal Products, S.p.A. The EC st ates in its oral statement that "Sara Lee, a large US
multinational, acquired Al Ponte Prosciutto, which produces Prosciutto di Parma," citing to Exhibit EC-61. This
is incorrect. Al Ponte Prosciutto was not acquired by Sara Lee Corporation, the US parent company of the Sara
Lee group. As Exhibit EC-61 states, Al Ponte Prosciutto was acquired by Sara Lee Personal Products, S.p.A.,
an Italian corporation under common control with Sara Lee Charcuteria SA, a French corporation. As a legal
matter, all companies involved in the transaction were EC companies and, thus, EC nationals. The "Kraft
Foods" example involves, according to Exhibit EC-62, a company founded in Italy in 1908 by Giovanni
Invernizzi. Nothing suggests that this company is not Italian. In 1985, his son sold the company to Kraft Foods
Group, which has an Italian subsidiary. In 2003, the business of Giovanni Invernizzi's Italian company was
partly sold to Lactalis, a French da iry company, again with an Italian subsidiary. Nothing suggests that the
Italian company somehow became a US national at any point in these transactions. Similarly, with respect to
the "Nestle" example, nothing in Exhibit EC-63 suggests that the salami firm Vismara, owned by Nestle, and
sold to another Italian company, was not a company incorporated in Italy and an Italian national. Similarly, the
EC cited in its second submission, paragraph 46, the example of a Norwegian, Mr. Larsen, who founded Larsen
Cognac House in 1926. As Exhibit EC-36 notes, Mr. Larsen bought the small firm of Cognac Joseph Gautier
and his son took over the firm which, by then, operated under the name Larsen. The firm's website indicates
that the firm is a French corporation (a societe anonyme) domiciled in Cognac, France. Similarly, the other
examples provided by the EC of companies in the wine sector – a sector not covered by the EC GI Regulation –
do not support the EC's view with respect to any non-EC nationals claiming rights in EC-based GIs.
9 US Opening Oral Statement at Second Meeting, para. 14.

Response:

14. The United States understands the question as re ferring to the fact that the two different
"tracks" for registering GIs – the "domestic track" under Article 5 and the "foreign track" under
Article 12 and 12a – do not literally use the words "EC national" and "non-EC national" to describe
those using each track; and that, similarly, the two separate objection procedures also do not use the
words "national" but refer to pe rsons "from a WTO Member" and persons "resident or established" in
a WTO Member. Hence, the measure is arguably "neutral" on its face.

15. As an initial point, it is worth underscoring again that, although the EC GI Regulation does
not use the word "national", it does provide for different treatment of persons depending on which
quadrant set out in response to question 101 they fall in. Further, there is less favorable treatment
accorded to non-EC nationals in quadrant 4 than is accorded to EC nationals in quadrant 1.
Consequently, there is a breach of national treat ment obligations, despite the lack of specific
references to "nationals".

16. Of course, whether there is de facto discrimination depends on the particular measure and the
facts involved. In the context of this particular dispute, among the additional factors relevant to
finding inconsistency with the national treatment and MFN obligations under the TRIPS Agreement
and the Paris Convention – despite the lack of the word "national" in connection with the
discrimination in the EC GI Regulation – are that:

(1) As discussed above, it is apparent from the m easure itself that there is a very close fit
– and often a complete identity – between the criteria for who qualifies for the "domestic
track" versus who qualifies for the "foreign track " and EC nationals vers us non-EC nationals.
Although the GI Regulation does not use the te rms "EC national" and "non-EC national", it
does everything but. The same is true of the two tracks for objections: indeed, as the US
second oral statement noted, the EC itself stated in the preamble to the amendment to the GI
Regulation last year that the additional track fo r persons resident or established in other WTO
Members was necessary in order to provide the right of objection to other WTO Members'
"nationals".
10 Further, that there may not be a perfect fit – i.e., that some situations might fall
within quadrants 2 and 3 in the response to question 101 – does not detract from the national
treatment violation.
(2) Indeed, from a practical point of view, it is hard to construct a closer fit between the
distinctions drawn in the GI Regulation and "n ationality". One possibility would have been
for the EC GI Regulation literally to discrimin ate based on nationality. But this would have
presented practical difficulties, because the EC has asserted that, under the TRIPS Agreement,
the nationality of a person is determined according to the law of the country whose nationality
is being claimed. Therefore, a literal distinc tion in the GI Regulati on between EC nationals,
on the one hand, and non-EC nationals, on the ot her, would have required reliance, not on
rules set out in the GI Regulation itself, but on the laws of the various non-EC countries. By
contrast, making distinctions based on wh ere the person is est ablished and producing
agricultural products and foodstuffs – as the GI Regulation does – avoids reliance on the laws
of non-EC countries, while nonetheless making distinctions corresponding to nationality.
(3) There is a close connection between ge ographical indications, geographic regions,
and the persons established in those regions
11 – a reputation for products from those regions

10 US Opening Oral Statement at Second Meeting, para. 9.
11 As the EC itself has noted, "geographical indications are the common patrimony of all the producers
of a certain area, and ultimately of the entire population of that area." First Written Submission of the EC,

often builds up over hundreds of years. For th is reason, among others, it is obvious that, for
instance, French nationals have an interest in claiming rights to French-based GIs, and US
nationals have an interest in claiming rights to U.S.-based GIs. This f act is intrinsic to the
very nature of the GI itself. Predictably, it is also born out by factual indications that for
instance, in the United States, nationals have an interest in GIs of their own nationality
12 and
that agricultural land is 99% owned by US nationals. 13 Equally predictably, the only
examples the EC can come up with in rebuttal are apparent examples of EC nationals with
some non-EC connections taking advantage of EC GIs. 14 Therefore, discrimination against
those with rights in non-EC GIs equates to discrimination against non-EC nationals.
(4) After 12 years, there is not a single non-EC -based GI that is re gistered in the EC,
compared to over 600 EC-based GIs. Of the over 600 EC-based GIs, the EC to date has not
been able to identify a single GI applicant w ho is not an EC national (even though it, and not
the United States, has access to all of the relevant registration information).
(5) The Appellate Body has been clear in the analogous context of other national
treatment obligations in the WTO agreements that the national treatment obligation covers
both de jure and de facto discrimination. One reason is that, if the obligation were only de
jure, circumventing the obligations would be easy.15 Therefore, the Appellate Body has been
clear about the need for a meaningful analysis of de facto discrimination, not just de jure
discrimination. This is not to say, however, contrary to the EC's claims, that evidence of
actual circumvention is necessary to justify a finding of de facto discrimination, or that the
existence of Article III GATT 1994 obligations means that a de facto analysis under the
TRIPS national treatment obligation is unnecessary . To the contrary, the Appellate Body has
been clear in finding that, in the absence of express language limiting the analysis to de jure
discrimination, national treatment obligations are de facto obligations: 16 a Member cannot
avoid these obligations by formally neutral language.
17. As for the notion that the existence of Ar ticle III of the GATT 1994 somehow eliminates the
possibility of a de facto breach of TRIPS Article 3, this is plainly wrong. Article III of the GATT
1994 concerns less favorable tr eatment of products based on or igin, whereas TRIPS Article 3
concerns less favorable treatment of persons regarding intellectual property protection based on
nationality. In the case of GIs, there is a st rong link between persons claiming rights and the goods
with respect to which the rights are claimed. A ccording to Article 22 of the TRIPS Agreement, GI
rights derive solely from the existence of goods that have a "quality, reputation or other characteristic"
attributable to its territory of origin. Thus, a GI right does not exist in the abstract; it exists solely in

paragraph 307, 4th bullet point. Similarly, EC Trade Commissioner Lamy, in a speech last year, described the
benefits of geographical indication protection as follows:

the geographical indication is a kind of collective "m ark" of the farmers and craftsmen of a region. It
guarantees that the use of a name will remain attach ed to a region and to the community that saw its
birth.

SPEECH/03/292 Pascal Lamy EU Trade Commissioner Creation of the Organisation Geographical
Indications Network (ORIGIN) Brussels, June 11, 2003 (emphasis added). Exhibit US-49. Similarly, as
mentioned in other US submissions, the preamble to the EC GI Regulation cites the "considerable" benefit to the
rural economy by "improving the incomes of farmers and by retaining the rural population in these areas."
12 See Response of the United States to Panel Question 27 (July 8, 2004), para. 55; Exhibit US-43.
13 Exhibit US-72; US Opening Oral Statement at Second Meeting, para. 14.
14 See response to question 104 above, note 8.
15 Appellate Body Report, EC – Bananas , para. 233; Appellate Body Report, Canada – Autos , para.
142.
16 Appellate Body Report, EC – Bananas , para. 233. It is important to note that, by arguing that
evidence of actual circumvention is necessary for a determination of de facto violation, the EC is only confusing
the de jure – de facto distinction with the "as such" – "as applied" distinction.

connection with goods. To attempt, as the EC does, to divorce the acquisition of the right from the
good that is the subject matter of the right overlooks this feature of the right. Indeed, given this
fundamental aspect of GIs, the EC GI Regulation thus discriminates against both the goods identified
by a GI and persons with rights to or interest in those GIs. The EC is wrong to complain about
"overlap": the Regulation simply breaches more than one WTO obligation.

18. The lack of a general exception like Article XX of the GATT 1994 is not relevant to whether
there is de facto discrimination under the TRIPS Agreement or to the interpretation of Article 3 of the
TRIPS Agreement. It is, however, relevant to th e fact that Article III of the GATT 1994 and Article 3
of the TRIPS Agreement are two separate obligat ions. The TRIPS Agreem ent contains general
"security exceptions" (Article 73), just as th e GATT 1994 contains "security exceptions" in
Article XXI. Article 3.2 of the TRIPS Agreemen t also contains limited exceptions to national
treatment as provided for in the Paris Convention, using language directly analogous to parts of
Article XX(d). This shows that the drafters we re able to incorporate Article XX type approaches
where they deemed warranted. That there are no general Article XX exceptions to TRIPS obligations
can only be regarded as deliberate. And while the lack of such exceptions has no impact on how to
interpret the fundamental national treatment obligat ion (much less should its absence be read to adopt
a narrow reading of this obligation), it does conf irm that any defense the EC might present under
GATT Article XX(d) with respect to GATT violations is not transferrable to violations under the
TRIPS Agreement.

19. As the United States has stated on several o ccasions, the Panel should not be concerned by the
potential overlap between the TRIPS Agreement a nd the GATT 1994. Indeed, particularly with
respect to geographical indications, such overlap is to be expected. Any such overlap, however, does
not affect the analysis of discrimination agains t nationals under the TRIPS Agreement. A measure
may be simultaneously covered by several covered agreements – e.g., the TBT Agreement and
Article III of the GATT 1994 – without the obligations of each agreement being narrowed thereby.

20. As a final note, it should be no surprise that the GI Regulation is inconsistent with the EC's
national treatment obligations under the TRIPS Agreement and the Paris Convention, considering that
the GI Regulation itself evidences a specific intenti on in its preamble to protect EC agricultural
production and popula tions in rural areas in the EC. Further, such a breach of national treatment is
entirely consistent with the EC's long-standing public statements – both to the complainants and third
parties to this dispute and to the WTO Membership at large – that GI protection would be made
available only
 to those Members with equivalent GI systems and offering reciprocal protection to EC
products. In the case of the GI Regulation, the WTO breach established by the Regulation itself is
fully supported by and entirely consistent with the protectionist structure of the GI Regulation.

Q104. Please provide your interpretation of the term "separate customs territory" as used in
footnote 1 to Article 1.3 of the TRIPS Agreement in accordance with the cust omary rules of treaty
interpretation. What relevance can be drawn from the fact that the same term is used in Article XXVI
of GATT 1994? USA, AUS, EC

Response:

21. The United States would like to emphasize as an initial matter that it is beyond dispute that
this footnote defines nationals for at least some WTO Members, and that for those Members, it is
plain that any discrimination based on where a le gal person has a real and effective industrial or
commercial establishment is based on nationality. Thus the EC GI Regulation discriminates based on
nationality when it explicitly discriminates in favor of EC nationals and agai nst legal persons with a
real and effective industrial or commercial establis hment in those separate customs territory Members
of the WTO.

22. In response to the Panel's question, however, under the customary rules of treaty
interpretation "[a] treaty shall be interpreted in good faith in accordance with the ordinary meaning to
be given to the terms of the treaty in their context and in the light of its object and purpose".
17 A
general interpretation of the phrase "separate customs territory" starts with the ordinary meaning of
the word "territory", which indicates that the term refers to a defined geographical area. The word
"customs" indicates that the territory in question is defined by reference to a unique customs regime
applicable in that territory. Th e United States notes, as part of the context for interpreting the term,
that Article XXIV:2 of the GATT 1994 defines a "customs territory" in similar terms. It states that a
"a customs territory shall be understood to mean any territory with respect to which separate tariffs or
other regulations of commerce are maintained for a subs tantial part of the trade of such territory with
other territories." (Emphasis added).

23. The factor that distinguishes one customs territory from another is the maintenance of
"separate tariffs or other regulations of commerce". "Separateness" is, therefor e, an intrinsic feature
of a "customs territory". As the EC correctly poi nts out, this means that every customs territory is
"separate" from every other customs territory. Indeed, most WTO Members are customs territories
that are "separate" from the customs territory of most other WTO Members. However, the term as
used in footnote 1 of the TRIPS Agreement refers not to "separate customs territories" generally, but
to a "separate customs territory Member of the WT O." For this reason, the United States agrees with
the EC that the term "separate customs territory Member of the WTO" in footnote 1 of the TRIPS
Agreement does not encompass every "customs territory". Indeed, Article XXVI:5 of the GATT 1994
is useful to demonstrate the type of distinction that footnote 1 of the TRIPS Agreement is making.
Article XXVI:5 refers to a separate customs te rritory for which a GATT contracting party has
responsibility and has singled out not
 to be covered by that contracting party's acceptance of the
GATT 1994. These separate customs territories would clearly not be a separate customs territory
"Member" of the WTO.

24. In footnote 1, the reference to "a separate customs territory Member of the WTO" describes a
particular category of WTO Members and seeks to distinguish this category of WTO Members from
some other category of WTO Members. The key to the distinction between the two categories is that
WTO Members in the sub-category covered by footnote 1 are all "separate customs territory
Members". In identifying the other category of WTO Members from which the Members covered by
footnote 1 are distinguished, the United States turns to context. As part of the context, the United
States observes that Article XII of the Marrakesh Agreement Establishing the World Trade
Organization ("Marrakesh Agreement" or "WTO Agreement") lays down rules on accession as a
Member of the WTO. The opening clause of Ar ticle XII defines which legal entities may become
WTO Members. It states:

Any State or separate customs territory possessing full autonomy in the conduct of its
external commercial relations and of the other matters provided for in this Agreement
and the Multilateral Trade Agreements may accede to this Agreement …
25. Article XII, therefore, confirms the two categories of WTO Members. First, there are
"States". The second category of Members consists of separate customs territories with full autonomy
over external commercial relations and of other matters provided for in the Marrakesh Agreement.

26. There is nothing in footnote 1 that suggest s that the expression "separate customs territory
possessing full autonomy in the conduct of its extern al commercial relations" should apply solely to
only certain separate customs territories fulfilling the au tonomy requirements, such as territories that
form a sub-part of a State. Instead, the text of Article XII covers "any" autonomous separate customs
territories, without qualification. Such separate cust oms territories may, therefore, form a sub-part of

17 These rules are reflected in Article 31(1) of the Vienna Convention on the Law of Treaties.

a State or comprise some or all of the territory of several States. The issue is simply whether the
territory possesses full autonomy in the conduct of its external commercial relations and of the other
matters provided for in the Marrakesh Agreement.

27. In that respect, the United States observes that the EC is not a "State"; however, the EC is a
"separate customs territory possessing full autonomy in the conduct of its external commercial
relations". The United States, therefore, believes th at the EC is a "separate customs territory Member
of the WTO" rather than a State Member of the WTO for purposes of footnote 1 of the TRIPS
Agreement.

28. The United States notes, though, that th e EC did not accede to the WTO pursuant to
Article XII of the Marakesh Agreement. Rather , the EC was an original Member of the WTO
explicitly covered by Articles XI:1 and XIV of the Ag reement. The EC's intention to be an original
member was known during the negotiation of the Ma rrakesh Agreement. Article IX:1 and other
provisions of the Marrakesh Agreement recognize th at the EC would be a WTO member. Articles
XI:1 and XIV do not distinguish between States and separate customs territories, as there was no need
for these categories in determining rules for origin al membership of the WTO. Instead, original
membership was reserved for GATT contracting par ties. There was only a single exception to this
and that was for the European Communities. Thus , in Articles XI:1 and XIV there was no need to
describe a class or category to which the EC belonged. Instead, the EC could be identified by name as
the sole original WTO Member that was not a GATT contracting party. This does not mean, though,
that the EC is not a separate customs territory Member of the WTO.

29. In particular, there is nothing in the text of Articles XI:1, XII, or XIV to suggest that the
original WTO Members do not fall within one of the two categories of WTO Member described in
Article XII, namely States or fully autonomous separa te customs territories. To the contrary, all the
original WTO Members fit easily into one or the othe r group of Members. It would, in any event, be
curious to interpret Article XII in such a way th at an original WTO Member could not qualify to
become a WTO Member.

30. Accordingly, the United States submits that Ar ticle XII confirms the interpretation of TRIPS
footnote 1 that there are two categories of WTO Member – States and fully autonomous separate
customs territories.

31. This interpretation is also confirmed by how footnote 1 is used. Article 1.3 defines
"nationals" for the purposes of the TRIPS Agreement. In that provision, "nationals" are defined by
reference to the scope of protection afforded unde r various international c onventions on intellectual
property. In each of these WIPO-administered c onventions, protection is afforded to persons
possessing the nationality of a country. Not all WTO Members grant nationality, however; see, e.g.,
GATS Article XVIII(k)(ii)(1). For that reason, the TRIPS Agreement has to ha ve two definitions of
"nationals". The first definition, in the main text of Article 1.3, applies to Members that can confer
nationality, as provided for in the list of WIPO -administered conventi ons, including the Paris
Convention. The second definition, in footnote 1, applies to separate customs territory WTO
Members that cannot so confer nationality.

32. The EC acknowledges that it cannot grant nationality as it argues that, in its view, EC
nationals are nationals of an EC member State. However, as just explained, the TRIPS Agreement
provides only two definitions of "nationals". Th ere is no third option for the EC along the lines the
EC envisages. The EC must fall within one or other of the definitions applicable to the categories of
WTO Member identified in TRIPS Article 1.3 and in Article XII of the WTO Agreement, and it
clearly does not fall within the definition reserved for States.

33. The absurd consequence of the EC's view th at it is not a separate customs territory for
purposes of the TRIPS Agreement, is that the EC has no nationals, and, therefore, has no national
treatment obligations. Such an interpre tation of the TRIPS Agreement, rendering inutile for one
WTO Member the fundamental obligation of national tr eatment, must be rejected, since it is contrary
to customary principles of interpretation of public international law.

34. The drafting history confirms the United Stat es' view. First, an "Informal Note by the
Secretariat", of 7 December 1992, states that the term "national" in various draft texts "entails a lack
of precision, and could engender legal uncertainty , with regard to the legal position of separate
customs territories Members of the MTO." A number of proposals were made for resolving these
difficulties. Among them was the addition of text to the draft TRIPS Agreement.

35. In the TRIPS Agreement, there was a proposal to amend a footnote that had been proposed in
the Brussels draft of the Agreement. That draft in cluded an early version of footnote 1 that applied
solely to "Hong Kong". The Secretariat Note pr oposed extending the footnote generally to "separate
customs territory Member[s] of the MTO". Again, the reason for this proposal was to resolve the
legal difficulty stemming from the fact that certain Members cannot confer na tionality and, therefore,
the definition of "national" in Article 1.3 would not apply to them. The final text of footnote 1 is
based closely on the proposal in the Secretariat Note.

36. Additional support for this view of the ne gotiating history comes from Daniel Gervais'
commentary on the drafting history. Gervais states that "[a] footnote was added to deal with customs
territories which may be WTO Members without being states , and hence unable to join
WIPO-administered treaties."
18 This statement again identifies the two categories of WTO
Membership. The text and context of footnote 1 of the TRIPS Agreement, in light of the object and
purpose of the TRIPS Agreement to "reduce distortions and impediments to international trade, ... to
promote effective and adequate protection of intellect ual property rights, and to ensure that measures
and procedures to enforce intellectual property righ ts do not themselves become barriers to legitimate
trade ..." for all WTO Members (State or non-State),
19 therefore, support the view that footnote 1
applies to the EC, a separate customs territory WT O Member. Moreover, pursuant to Article 32 of
the Vienna Convention, the negotiating history confirms this interpretation.

Q105. The Panel takes note of the EC's view that it is not a separate customs territory Member of
the WTO within the meaning of footnote 1 to Ar ticle 1.3 of the TRIPS Agreement (EC rebuttal,
para. 35).

 (a) Which natural persons does the EC consider EC nationals for the purposes of
TRIPS? Are they also nationals of EC member States?

 (b) Which legal persons does the EC consid er EC nationals for the purposes of TRIPS?
Are they also nationals of EC member States? EC

Q106. What are the nationalities of the applic ants for GIs registered under Regulation (EC)
No. 2081/92? Have there been any applicants who we re not nationals of the EC member State in
which the relevant GI was located? Please supply details of any that were not, and the relevant GIs.
To the extent that you are aware of the nationality of persons other than the applicants who use a GI
in accordance with its registration, please supply the same information. EC

18 Gervais, The TRIPS Agreement, Drafting Hist ory and Analysis (Second Edition). Sweet and
Maxwell, London, 2003, p. 88. As Gervais notes, post-TRIPS WIPO Treaties allow certain intergovernmental
organizations to adhere, but this was not true of the WIPO treaties referenced in Article 1.3 of the TRIPS
Agreement with respect to the definition of "nationals".
19 See first paragraph of the preamble of the TRIPS Agreement.

Q107. The Panel takes note of the examples of foreigners and foreign companies which have
invested in Europe (EC rebuttal, para. 46 and Exhib its EC-36 to EC-39; EC second oral statement,
para. 28 and Exhibits EC-61 to EC-63). Is the Larsen firm a French company? Have Suntory
Limited, E & J Gallo and the Robert Mondavi fam ily formed subsidiaries, joint ventures or other
entities under the laws of France and Italy to invest in those wine estates? Did Sara Lee, Kraft Foods
and Nestlé purchase companies formed under the law of an EC member State?

 The Panel takes note that the EC argues that the possibility that these foreign nationals
formed legal persons under the laws of an EC memb er State is not attributable to Regulation (EC)
No. 2081/92 (EC second oral statement, para. 30). Is it appropriate to exclude such other factors
from an examination of the WTO-consistency of the Regulation? Does the EC submit that the Panel
should "pierce the corporate veil" and refer to ownersh ip and control to determine nationality for the
purposes of TRIPS? EC

Q108. Article 13 of Regulation (E C) No. 2081/92 provides certain protection for registered names.
Please explain the practical operation of this article with respect to products, including the types of
orders which may be made under Article 13(1) and the consequences of Article 13(2). How would
they affect imported products? How would they provide less favourable treatment to imported
products? USA, AUS

Response:

37. The United States does not fully understand this question, as Article 13(1) does not refer to
"orders". In addition, the United States understands th at the reference to Article 13(2) should be to
Article 13(3). The United States assumes that this question refers to any orders, including by EC
member State institutions, that may be used to protect registered names as provided in Article 13.

38. With this understanding, products whose na mes the EC registers under the GI Regulation
benefit from numerous competitive advantages that ha ve been detailed in the US submissions, oral
statements and answers to questions. These advantag es include the ability to be distinguished in the
market-place – through an EC-sanctioned mechanism – as products with special characteristics or
other qualities attributable to their geographical origin . Those products – and only those products –
may also be accompanied by an official EC "sym bol" or "logo" informing the consumer that the
product is a registered GI.
20 As the relevant EC regulation explains

[t]he logo will allow producers of food products to increase awareness of their
products among consumers in the European Un ion... The presence of this logo is a
genuine guarantee for all European consumers, making it clear that the special nature
of this product lies in its geographical origin . Because of this, products will inspire
more confidence. As producers, the logo provides you which [ sic] a marketing tool.
You will be able to put the logo on the labe ls or packaging of your products, and also
use it in your advertising.21
39. Further, the registered names of those produc ts are reserved for the use of those registered
products, and, indeed, other products will be barred from being accompanied by any name that even
evokes the registered name, even if there is no risk of consumers being misled. 22 Those products
whose names are registered under the GI Regulation are protected in the marketplace against a broad

20 Article 5a of Commission Regulation 2037/93, p. 5. Exhibit COMP-2.a.
21 Annex II of Commission Regulation 2037/93. Exhibit COMP-2.a.
22 Article 13(b) of the GI Regulation.

range of competing uses of names or descriptions, whic h are laid out in Article 13. Consequently, the
kinds of orders that might be issued pursuant to Article 13(1), and more particularly by judicial and
administrative authorities in EC member States that implement Article 13, would be to prevent all
other products from being promoted – or sold accomp anied by names or labels – using the names or
words that are deemed to fall within the scope of protection offered by Article 13(1).

40. But imported products do not have access to this system of protection on the same terms as
EC products. Indeed, as presented by the United Stat es throughout this dispute, the EC GI Regulation
erects prohibitive barriers to access to this system of GI protection for non-EC products. Thus,
imported products are affected in at least two ways. First, they, unlike their EC-origin "like"
counterparts, cannot benefit from the coveted register ed GI status, cannot use the official "logos" and
cannot benefit from the competitive advantages that the EC GI Regulation bestows on GI products.
This amounts to less favorable treatment of impor ted products compared to their "like" EC
counterparts.

41. Second, the imported products are at an affirmative competitive disadvantage vis-a-vis their
European competition in cases where any name, product description, or descriptive labeling that is an
important selling point for the imported product is de emed to fall within the ambit of "protection"
afforded to the protected EC product under Article 13(1). Thus, under Article 13(1), an EC member
State judicial or administrative body might issue an order that an imported cheese product be stripped
of any mention of a recognized descriptive term for that cheese because it is deemed "evocative" of
the name of the protected EC cheese. In sum, due to the lack of ability to object to the registration of
the EC product's name, and the lack of ability of the imported product to benefit from the protections
of registration itself, this situation, too, amounts to less favorable treatment of imported products.

42. The consequence of Article 13(3) of the GI Regulation is to enhance this competitive edge
bestowed on products that benefit from GI stat us. The names used to promote and sell imported
products that do not benefit from GI status – name s which might communicate a special characteristic
of the product – could become generic, meaning th at they could become the "common name" for the
product, thereby losing their st atus as a source identifier.
23 Names of products benefitting from GI
status cannot lose this status. This also means that an imported product might be blocked from being
identified using what would normally be a "gener ic" description for the product, essentially reserving
to the GI product generic terms that accurately d escribe a product to the consumer. The inability to
identify imported goods to consumers by their common name – reserving that name to particular GI
products – accords less favorable treatment to those goods.

Q109. Leaving aside the rights conferred by Ar ticle 13 of Regulation (EC) No. 2081/92, the
complainants refer to the "intent and the effect of the Regulation", the "perceived" advantages of
registration and the benefits "claimed by the EC" to be gained from protection under the Regulation
(US first written submission, paras.61-62; Australia 's first written submission, para. 197 and US and
Australia's respective responses to Panel question No. 32). On what basis do the complainants argue
that the aims and effects of the EC measure are relevant to ascertaining less favourable treatment
within the meaning of Article III:4 of GATT 1994? USA, AUS

Response:

43. The United States is not using the "aim and e ffects" of the EC measure to determine whether
there is less favorable treatment under Article III: 4 of the GATT 1994. The less favorable treatment
accorded imported products is apparent from the meas ure itself, and the obligation is fully articulated
in Article III:4. However, as the United States h as noted throughout this proceeding, the EC itself
emphasizes the significant competitive and other adva ntages being bestowed on persons and products

23 Article 3(1) of the GI Regulation.

that can benefit from GI protection under the GI Regulation, yet both the EC (in public and private
statements to WTO Members) and the Regulation itself make clear that there are substantial – often
insurmountable – obstacles to non-EC persons and products benefitting from these competitive and
other advantages. Further, the pr eamble to the Regulation highlights the role of the Regulation in
promoting EC products with certain characteristics, which are of "considerable benefit" to the EC
rural economy and highlights the importance of the role that production, manufacture and distribution
of agricultural products and foodstuffs play in the Community economy. The EC has noted that GI
protection for its products and pers ons are particularly important as agricultural subsidies are phased
out. And of course, not a single non-EC-based GI has ever been registered, compared to the over 600
EC-based GIs that have been registered. Taken to gether, this evidence is a virtual admission by the
EC that the EC GI Regulation does not provide the same access to these benefits to non-EC products
and nationals as it provides to EC nationals and products. Further, this evidence helps clarify the
factual question of the meaning of the various provisions of the EC GI Regulation, and how it
operates.

44. In light of this evidence, it should come as little surprise that the EC GI Regulation is in
breach of the EC's national treatment obligations under the TRIPS Agreement, the Paris Convention,
and the GATT 1994, a legal conclusion that is ap parent from the EC GI Regulation itself. More
generally, the United States notes that, as the Appella te Body has said, "[t]he broad and fundamental
purpose of Article III is to avoid protectionism in the application of internal tax and regulatory
measures.
24 The Appellate Body has also noted that Article III:1, in which the Members recognize
that internal regulations and requirements such as those at issue here "should not be applied to
imported or domestic products so as to afford protection to domestic production" informs and
provides part of the context of all of Article III.

Q110. Does the EC contest that, to the extent that Regulation (EC) No. 2081/92 provides GI
protection for EC nationals and is a law affecting EC products, GI protection for other WTO Member
nationals and imported products sole ly through other laws, such as labelling and unfair competition,
would be less favourable treatment? EC

Q111. Does the EC contest that national treatment and MFN obligations under TRIPS apply to
TRIPS-plus protection, and apply to Regulation (EC) No. 2081/92 even to the extent that it does not
merely implement the EC's obligations under Article 22? EC

Q112. The Panel takes note that the Commission has not recognized any country under Article 12(3)
of Regulation (EC) No. 2081/92 (EC response to Panel question No. 10, para. 22). Is the Commission
obliged to recognize any country that satisfies the conditions set out in Article 12(1)? USA, AUS, EC

Response:

45. It appears that the Commission is so obliged. Article 12(3) of the GI Regulation requires the
Commission, upon request, to examine whether a thir d country satisfies the conditions set out in
Article 12(1), i.e., "[t]he Commission shall examine..." Where those conditions are satisfied, it
appears that the Commission would have to make an affirmative decision to that effect, and that,
following that decision, the registration procedures set out in Article 12a "shall apply."

Q113. The EC argues that there must be a subst antive difference between two provisions governing
the registration of GIs in order fo r one to entail less favourable t reatment (EC second oral statement,
para. 40). What is a "substantive" difference in th is sense? Does the EC allege that there is a de
minimis standard for less favourable treatment under TRIPS or GATT 1994? Is a simple difference in
language insufficient to establish different treatment? EC

24 Appellate Body Report, Japan – Alcohol, p. 16.

Q114. With respect to registration applications under Article 12a(2) of Regulation (EC) No.
2081/92, a third country must verify that the requirem ents of the Regulation are satisfied before it
transmits the application:

 (a) to what extent is this designed to confirm the protection of the GI in its country of
origin in accordance with Article 24.9 of the TRIPS Agreement, and to what extent
does it respond to other objectives?

 (b) is this additional to the requirement that a registration application transmitted to the
Commission must be accompanied by a description of the matters set out in
Article 12a(2)(a)?

 (c) does the Commission also examine wheth er the application satisfies the conditions
for protection under Article 12b(1)(a)? Ho w is this examination different from the
verification by the third country? EC

Q115. With respect to objections under Article 12b( 2)(a) of Regulation (EC) No. 2081/92, what is an
objection that "comes from a WTO Member"? With respect to objections under Article 12d(1) of the
Regulation, what is the meaning of a person who "is from a WTO Member"? Do they both refer to the
place of residence or establishment of the person who wishes to object? Must objections under both
provisions be sent to the country in which the person resides or is established? EC

Q116. To the extent that certain responsibilities und er Articles 12a and 12d(1) of Regulation (EC)
No. 2081/92 are borne by non-EC WTO Members:

 (a) how is the EC satisfied that every other WTO Member has the authorization to carry
them out? (Please refer to Brazil's response to Panel third party question No. 1) (EC
second oral statement, paras. 72-77).

(b) if other WTO Member governments lack aut horization to carry them out, can they be
carried out by the EC instead?

 (c) to what extent does the EC itself accord no less favourable treatment to the nationals
of other Members, and to what extent do other WTO Members share the
implementation of that obligation? Can a Member delegate the implementation of
WTO obligations to other Members with or without their prior consent?

 (d) to what extent has the EC accorded ce rtain treatment to the nationals of other WTO
Members rather than to the governments of those other WTO Members? EC

Q117. The Panel takes note of the EC's response to Panel question No. 8 concerning the meaning of
"third country" and seeks clarification as to whether "third country" as used in Article 12(2) of
Regulation (EC) No. 2081/92, includes WTO Members. If so, why does the "without prejudice" clause
in Article 12(1) form part of the context of Articles 12(1) and (3) but not Article 12(2)? If not, where
does the Regulation cover identical GIs from the EC and other WTO Members? EC

Q118. The Panel takes note that, in Australia's vi ew, the identical GI labelling requirement would
not be inconsistent with Article 2.1 of the TBT Agreement if it was applied to both EC and imported
products according to date of registration, not or igin. (Australia's response to Panel question No.
53). Even if Article 12(2) does not apply to EC products as well as im ported products, does the
Commission have the discretion to apply the same requirement according to the date of registration to

EC products under Article 6(6) in order to ensure that the identical labelling requirement is applied
to the later GI irrespective of the origin of the products? USA, AUS, EC

Response:

46. There is nothing in Article 6(6) that would permit the Commission to import the requirement
of Article 12(2) into Article 6(6). In Article 6( 6), the requirement is that the use of registered
homonymous name "be subject to there being a cl ear distinction in practice between the homonym
registered subsequently and the name already on the register", subject to certain equitable
requirements. Consequently, the proposed use of an EC-based homonym that gives rise to such a
"clear distinction in practice " – and does so without using an indication of country of origin – would
have to be registered. By contrast, a non-EC-b ased homonym that similarly gives rise to a "clear
distinction in practice" without using an indicati on of country of origin, would, nevertheless, under
Article 12(2), have to accompanied by a country of origin.

Q119. What is the difference, if any, in the me aning of the word "homonymous" as used in
Article 6(6) of Regulation (EC) No. 2081/92 and "identical" as used in Article 12(2)? Why does the
EC consider that homonyms are covered by the wo rd "identical" in Article 12(2) (EC response to
Panel question No. 43)? EC

Q120. The Panel takes note of Australia's confir mation that the only less favourable treatment under
the identical GIs labelling requirement is relabelli ng costs (Australia's response to Panel question
No. 52). Would imported products ha ve to be relabelled? Would existi ng marks of origin satisfy this
requirement? What does "clearly and visibly indicated" mean? AUS, USA, EC

Response:

47. The requirement of Article 12(2) that GI s for imported products, but not for domestic
products, must be accompanied by a clear and visible indication of country of origin on the label is
not simply a labeling cost issue. This requirement provides less favorable treatment to non-EC
nationals and products in part because the non-EC GI, unlike the EC GI, is being burdened by an
additional labeling requirement that is in the nature of a qualifier that detracts from the value of the GI
– that is, in the case of two homonymous GIs, the EC-based GI will be known purely by that GI,
while the non-EC product's homonymous GI will be qualif ied by a country of origin, implying that it
is something other than the "true" GI. Whether th e imported products have to be "relabelled" or not
would, of course, depend on how the products were first labeled. The fact remains that this
requirement constitutes an additiona l burden on foreign pro ducts and foreign GI holders that is not
faced by EC products and GI holders. The United States does not believe that existing marks of
origin requirements in the EC would satisfy this re quirement. "Clearly and visibly indicated" means,
in the US view, that the consumer is made aware that this GI has a stature that is different from EC-
based GIs.

Q121. The Panel takes note that Australia refers to Ar ticle 6(6) of Regulation (EC) No. 2081/92 as
the parallel provision to Article 12(2) (Australia's rebuttal, paras. 65-66). Does Australia wish the
Panel to address alleged discrimination arising from differences between these two provisions? What
is the less favourable treatment? AUS

Q122. Please refer to the phrase "labelling requirements as they apply to a product" as used in the
definition of "technical regulation" in Annex 1.1 of the TBT Agreement.

 (a) The EC argues that the "origin of a pr oduct is different from the product itself" (EC
response to Panel question No. 50). However, as the EC acknowledges, the origin of
a product may confer specific characteristics on it. This is consistent with the

definitions of designation of origin and geographical indication in Article 2 of
Regulation (EC) No. 2081/92, which provide that "the quality or characteristics of
the product ... are essentially or exclusivel y due to a particular geographical
environment ..." and that the product " possesses a specific quality, reputation or
other characteristics attributable to that geographical origin ...". How then is the
origin of a product entitled to bear a registered GI different from the product itself?
EC

 (b) What is the meaning of the words "as th ey apply to" as used in this part of the
definition? Do they refer to the application of labelling requirements to the
characteristics of a product, or to the product itself, or both? AUS, EC

Q123. Does the requirement to display a country of origin on a label under Article 12(2) of
Regulation (EC) No. 2081/92 constitute a mark of origin covered by Article IX of GATT 1994? AUS,
EC, US

Response:

48. Article 12(2) of the GI Regulation is not a ge neral country of origin marking requirement: it
is a specific labeling requirement imposed with respect to geographical indications which, as
discussed above in response to question 120, bur dens non-EC GIs to the disadvantage of non-EC
products and persons. This requi rement is above and beyond any ot her general country of origin
marking requirement that may apply to all agricu ltural products and foodstuffs, and the EC has not
argued that the requirements of Article 12(2) are me t through any general country of origin marking
requirements. Contrary to the EC's claims, there is nothing in Article IX of the GATT 1994 that
exempts such a requirement imposed with respect to GIs from national treatment obligations under
Article III of the GATT 1994.

Q124. The definition of "techni cal regulation" in Annex 1.1 of the TBT Agreement expressly
encompasses "marking or labelling requirements as they apply to a product, process or production
method". Are marks of origin and labels of orig in covered by Article IX of GATT 1994 excluded from
the scope of the TBT Agreement? Why did the negot iators not explicitly carve them out of its scope?
Can a line be drawn between marks of origin that fall under the TBT Agreement and those that do
not? What are the systemic consequences for marks of origin if they all fall within the scope of the
TBT Agreement? AUS, EC, USA

Response:

49. In this dispute, the United States is not cha llenging any EC general mark or label of origin
requirements. Presumably the EC general mark or label of origin require ments would already apply
separately to the types of products that may bear geographical indications, and the application of these
requirements would be independent of the geographical indication. As a result, this dispute does not
present the systemic questions posed in the Panel' s question and the United States is not seeking that
the Panel make findings with regard to this area. Rather, this dispute involves a specific requirement
imposed on imported products in c onnection with the use of geographical indications. The specific
requirement is an additional requi rement for non-EC products to be able to use a geographical
indication that does not apply to EC products. The additional requirement is all the more confusing
since geographical indications by their very natu re concern indicating the particular geographical
origin of products. The EC requirements for la beling geographic indications are mandatory labeling
requirements that come within the scope of the TBT Agreement.

Q125. To what extent would any less favourabl e treatment under Article 2.1 of the TBT Agreement
have to be determined in light of the regulatory objective a Member is trying to pursue under
Article 2.2? AUS, EC

Q126. With respect to Article 10(3) of Regulation (EC) No. 2081/92:

 (a) the first indent sets out certain requi rements for designated inspection authorities
and/or approved private bodies. Do these apply to all countries whose GIs are
protected under the Regulation, including non-EC member States?

 (b) the fifth indent appears to refer onl y to EC member States and third countries
recognized pursuant to Article 12(3). Where does the Regulation refer to the
applicable standard for WTO Members not recognized pursuant to Article 12(3),
whose requirements private bodies must fulfil for approval purposes?

 (c) the fifth indent refers to "[t]he equivalent standard or the applicable version of the
equivalent standard". What equivalent standard has been established for GIs for
areas located in WTO Members which do not satisfy the conditions of equivalence
and reciprocity in Article 12(1)? What are the criteria for establishing that
standard? Is it a matter of determining what is "equivalent" to standard EN 45011?
Or is it a matter of determining what standard would fulfil the objectives of the
Regulation in the light of each third country's own circumstances and conditions?
EC

Q127. Article 12a(2)(b) requires a declaration by a third country government that the structures
provided for in Article 10 are established on its territory. Article 10(2) refers to inspection
authorities and/or private bodies approved for that person by the Member State and Article 10(3)
provides that where they outsource they continue to be responsible vis-à-vis the Member State for all
inspections. What is the exact nature of the role that third country governments must play in the
creation and maintenance of the inspection structures that are called for under Article 10? EC

Q128. In the goods area, it is not uncommon t hat importing country governments designate, or
require the accreditation of, the bodies which expor ters may use in the territory of the exporting
country in order to determine compliance with pro duct requirements. To what extent does the EC
actually give the US and Australia more, rath er than less, flexibility by allowing the US and
Australian governments themselves to designate th e bodies that may participate in the inspection
process? Can the US and Austra lia elaborate on the reasons for which they consider governmental
involvement problematic? USA, AUS

Response:

50. The starting point with respect to regulatory requirements for products in the goods area is
generally that the imported product must undergo th e same procedures to determine compliance with
regulatory requirements in the importing country as do the domestic products of the importing
country. Normally this will mean that the im ported product will be inspected in the importing
country. However, Article 6 of the TBT Agreem ent provides for the acceptance of the results of
conformity assessment procedures in other countries. In keeping with Article 6, the importing
country may, as the Panel suggests, accept the resu lts of conformity assessment procedures conducted
in the exporting country, and for this purpose ma y designate conformity assessment bodies in the
territory of the exporting country, enter into mutu al recognition agreements, or permit conformity
assessment bodies in another Member to participate in their own conformity assessment procedures.

51. The EC GI Regulation, by contrast, does not make its inspection process available to
imported products at all. This presents an i mmediate national treatment problem. And it does not
compensate for this deficiency by designating bodies in the territory of the exporting country that can
determine compliance with the EC's requirements. The requirements of the EC GI Regulation are,
therefore, very different from those that are not uncommon in the goods area, and favor domestic
products over foreign products.

52. In addition, there is a significant diff erence between imposing requirements on persons
hoping to have their GIs registered and protected in the EC, on the one hand, and imposing
requirements – including particular domestic inspect ion structures – on their sovereign governments,
on the other. The former situation is anticipated w ith respect to the protection of intellectual property
rights, which, as the TRIPS Agreement explicitly recognizes, are private rights. The United States has
noted that both it and the EC, for instance, requi re that collective mark owners satisfy certain
requirements in order to register their marks. Th e imposition of requirements on rightholders is also
reflected in the nature of the national treatment and MFN obligations in the TRIPS Agreement and the
Paris Convention, which require no less favorable treatment of nationals with regard to the protection
of intellectual property rights, and not no less favorable treatment of WTO Members.

53. By contrast, imposing a requirement on sovereign WTO Members to put in place certain
inspection structures dictated by the EC as a condition for their nationals to obtain protection for their
GIs in the EC accords less favorable treatment to th ose nationals than to EC nationals. EC nationals
have the direct means, provided under the GI Regulation itself, in light of the already established
infrastructure of the European Union, to register a nd protect their GIs. Non-EC nationals do not, and
can only achieve those means if their government s decide to adopt the EC-style inspection
structures.
25

54. Therefore, it also cannot be said, as between two systems:

 (a) one in which the rightholder is itself in a position to satisfy the requirements of the GI
Regulation directly; and

 (b) one in which the US government is required to put in place certain inspection
structures, approve inspection bodies within that structure, and have the inspection
bodies be responsible to the US government fo r those inspections – all of which must
satisfy the EC's idea of an appropriate insp ection structure, as set out in Article 10 of
the EC GI Regulation;

that the latter system affords the US government more "flexibility" than the former.

55. The same considerations apply with respect to the obligations under Article III of the GATT
1994, for the reasons elaborated in the US submi ssions and oral statements. If a WTO Member does

25 It is worth recalling once again that while the EC attempts to label the requirement that foreign
sovereign countries establish EC-like inspection struct ures as a "product-specifi c requirement", this is
inaccurate. The EC's requirement has nothing to do with the product and whether a particular product meets the
EC substantive criteria for GI status. Instead, an in spection structure must be established by a foreign
government if any product from that country is to be pr otected in the EC under the GI Regulation. This is a
requirement of all products seeking protection in the EC. The EC attempts to confuse the distinction between a
substantive product-specific requirement (e.g., that an indication identify a good originating in a territory where
a given quality, reputation or other characteristic is attribut able to that territory) and this overarching procedural
requirement by claiming that different inspection bodies might be used to determine compliance of different
products with these product-specific requirements. It should be clear to all, however, that these inspection
bodies are not the inspection structures themselves (rather, they make up a part of a structure), nor are the bodies
a part of the product-specific requirements (rather, they merely determine whether such requirements are met).

not or cannot establish the EC-dictated inspection st ructures under Article 10 of the GI Regulation, a
product from that WTO Member that has all the ne cessary product-specific characteristics attributable
to origin required by the EC GI Regulation will nevertheless not be accorded GI status, while its
corresponding EC "like" product will be accorded that status. This constitutes less favorable
treatment of like products.

56. Two other points are worth noting. First, the EC is not allowing the US and Australian
governments themselves to designate the bodies that ma y participate in the inspection process. This
would be a different case if the EC imposed re quirements on the rightholder, but then "allowed" the
United States under the Regulation to facilitate the ri ghtholder's ability to satisfy those requirements.
But the GI Regulation does not "allow" the United St ates to do so; it requires that the United States
establish certain inspection structures, to approve inspection bodies under that structure, and to remain
responsible for those inspection bodies; and all of these structures and bodies must conform to the
EC's idea of what a good inspection structure is, as required by Article 10 of the EC GI Regulation.

57. Second, the EC is not permitting the United St ates to make its own determination as to the
sufficiency of the inspection structures and the in spection bodies instead of the EC doing so. Setting
aside the question of whether the United States' partic ipation is optional (it is not), the EC is in no
sense shifting the ability to designate appropriate in spection bodies from the EC to the United States.
Although the EC GI Regulation requires the Un ited States Government to establish the EC's
inspection structures and to designate inspection bodies that satisfy the EC's requirements, this is only
the threshold requirement for presenting an applicati on under Article 12a of the GI Regulation. The
EC then, under Article 12b of the Regulation, make s its own determination as to whether the request
"contains all of the necessary elements".

58. In other words, having forced other s overeign WTO Members to themselves meet the
requirements of the Article 10 inspection structures, th e EC reserves to itself the power to decide that
those inspection structures, including any insp ection bodies approved by the WTO Member, are
inadequate. The EC is in no sense, therefor e, "allowing the US and Australian governments
themselves to designate the bodies that may partic ipate in the inspection process". By retaining
ultimate authority to approve or re ject another sovereign country's d ecisions, it is clear the EC is not
providing flexibility, but is instead unilaterally a ttempting to subordinate sovereign countries to its
authority with respect to GI protection. While the EC is able to do this with respect to the EC member
States, it has no basis for doing this with other sove reign countries of the world. In this connection,
the United States wonders if the EC would accept if the United States required the EC to adopt a
particular inspection structure in order to have its GI s protected in the United States. An approach of
"dueling inspection requirements" could very quickly cause any system for GIs to break down.

59. The United States refers to its oral statements at the second meeting and to its first and second
submissions for further details concerning wh y requiring that other WTO Members establish
particular inspection structures is not appropriate and is in no sense "necessary".

Q129. The Panel takes note of the US arguments on inspection structures (US rebuttal, paras. 46-48
and 89-93; US second oral statement paras. 21-27). What aspects of government involvement in
inspection structures do you allege constitute less favourable treatment for foreign nationals? What
aspects do you allege constitute less favourable treatment for imported products? Is there less
favourable treatment where such structures already exist? USA

Response:

60. Requiring that WTO Members establish partic ular inspection structures, approve inspection
bodies, remain responsible for those bodies, and sa tisfy all of the requirements for those bodies and
structures as set forth in Article 10 of the GI Regulation – all as a precondition for nationals to protect

their GIs in the EC and for non-EC products to be nefit from GI status – results in less favorable
treatment for non-EC nationals and non-EC products.

61. It does not matter, from the perspective of the national treatment obligation, whether some
countries may have EC-compliant inspection structur es in place. The fact that some nationals and
products may have overcome the significant extra barri ers to entry put in place by the EC does not
mean that those significant extra barriers no long er constitute "less favorable treatment" of non-EC
nationals compared to EC nationals. Further, th e fact that some countries can meet the EC's
requirements means that their nationals and products are being granted advantages, favors, privileges,
and immunities that are not being accorded to nationals and products of all WTO Members, which is a
breach of MFN obligations.

Q130. Other than governmental involvement in th e inspection structures, what aspects of the
inspection structures do the US and Australia find problematic? USA, AUS

Response:

62. Because of the nature of the obligation in Ar ticle 10 for inspection structures, it is not possible
to separate the requirement that the government es tablish particular inspection systems from other
aspects of the inspection systems. As the United St ates has said, however, it is appropriate for the EC
to require assurances with respect to the integrity of the geographical indication, and both the EC and
the US, among other WTO Members, have such require ments, for instance, with respect to collective
marks.

Q131. Which EC Directives govern c onformity assessment to EC technical regulations in the goods
area? To what extent do those Directives re quire foreign governmental involvement in the
designation/approval of conform ity assessment bodies, when mut ual recognition agreements in the
conformity assessment area do not already exist? EC

Q132. The Panel takes note of the EC's examples of fl exibility in the design of inspections structures
(EC rebuttal, para. 104 and Exhibit EC-48). Do these examples all relate to the nature of the
inspecting authority? Who determ ines what constitutes an appropriat e inspection for each product,
and on the basis of what criteria? EC

Q133. The Panel takes note that Australia argues t hat the product specification requirements set out
in Article 4(2) of Regulation (EC) No. 2081/92 in clude "product characteristics", in particular
subparagraphs (b) and (e). (Austra lia's rebuttal, paras.197 and 204) If the inspection structures are
designed to ensure that the product specifications un der Article 4 of the Regulation are fulfilled, how
can they be a technical regulation and not a conformity assessment procedure? AUS, EC

Q134. The Panel takes note of the EC's response to Panel question No. 61, in particular regarding
the Panel's terms of reference. However, does the EC contest that a "conformity assessment
procedure" within the meaning of the TBT Ag reement assesses conformity with a "technical
regulation" or "standard" within the meaning of the TBT Agreement? If not, then can the EC
complete its analysis and explain whether the insp ection structures of Regulation (EC) No. 2081/92
assess conformity with each individual product specific ation referred to in Article 4 of the Regulation
for a registered name, and that those specifications therefore would constitute a "technical
regulation" within the meaning of the TBT Agreement? EC

Q135. The EC invokes Article XX(d) of GATT 1994 as a defence to the national treatment and MFN
claims with respect to third country governments' verification and transmitta l of applications, the
identical GIs labelling requirement and inspection stru ctures requirement. The EC alleges that these
requirements are "necessary" to secure compliance with Regulation (EC) No. 2081/92 or to attain the

legitimate objectives of the Regulation (EC rebutta l, paras.228-242, paras.263-265; EC second oral
statement, paras.132-135):

 (a) what is the "measure" necessary to secure compliance with laws or regulations
within the meaning of Article XX(d) in each case? What are the laws and regulations
with which each one secures compliance? Are the "measures" separate from the laws
or regulations?

 (b) can a measure that secures compliance with the "objectives" of a regulation, rather
than a regulation itself, satisfy Article XX(d)?

 (c) in what sense does each of these meas ures "secure compliance" with laws or
regulations? Are they enforcement mechanisms?

 (d) how are the laws and regulations with which each measure secures compliance not
inconsistent with the GATT 1994? EC

Q136. With respect to the issu e whether the measures are neces sary to secure compliance, and
without prejudice to the WTO-consistency of any alternative measures:

 (a) is the requirement that a third count ry government verify applications "necessary" to
secure compliance in cases where an applicant itself is able to prove that a GI is
protected in its country of origin, for exam ple, by submitting an authenticated copy of
a registration certificate?

 (b) is the requirement that a third count ry government verify applications "necessary" to
secure compliance in cases where the third country has no registration system for GIs
or where determinations that a GI is protected under unfair competition laws are
only made by the judicial branch of government after litigation?

 (c) is the requirement that a third count ry government transmit applications "necessary"
to secure compliance in cases where an applicant itself is able to send an application
to the Commission?

 (d) why does a third country government need to verify whether the person objecting is
resident or established in the third coun try? Why does the Commission need consult
with the third country if the statement of objection is admissible? (EC response to
Panel question No. 34).

 (e) is the identical GIs labelling requirem ent "necessary" to secure compliance in cases
where there is already a clear distinction in practice in the usual presentation of the
relevant products without clearly and visibly displaying the country of origin?

 (f) is the requirement that a third country government designate inspection authorities
"necessary" to secure compliance in ca ses where the Commission could designate
them in third countries (see US second oral statement, para. 53)?

 (g) is the requirement that a third country government declare that inspection structures
are established on its territory "necessary" to secure compliance in cases where an
applicant could arrange for independent insp ection structures to be put in place in
respect of a specific product (see US second oral statement, para. 53)?

 (h) how is the requirement that a private inspection body continues to be responsible
vis-à-vis a third country government "n ecessary" to secure compliance in cases
where the EC could conduct its own inspec tions of foreign GIs (see US second oral
statement, para. 53)?

 (i) how is the requirement that the insp ection authorities and/or private bodies have
permanently at their disposal staff an d resources necessary to ensure that all
products bearing GIs comply with the produc t specifications in their registrations?
(see Australia's rebuttal submission, para. 217). EC

Q137. The Panel takes note of the EC's view that Article 14(3) of Regulation (EC) No. 2081/92
allows its authorities to refuse or invalidate the reg istration of any confusing GIs (EC first written
submission, para. 286; EC rebuttal, para. 270). The complainants do not agree (US second written
submission, para. 166 and Australia's second written submission, para. 109). The following examples
have been referred to in this proceeding:

 (a) BAYERISCHES BIER and BAVARIA and HØKER BAJER?

 (b) BUDEJOVICKÉ PIVO and BUDWEISER?

 (c) GORGONZOLA and CAMBOZOLA?

Could these GIs be used in accordan ce with their registrations in a way that results in a likelihood of
confusion with the respective trademark(s)? USA, AUS, EC

Response:

63. Before addressing this question, the United States would like to emphasize that the issue
identified by the Panel in the question is only one asp ect of the inability of 14(3) of the GI Regulation
to substitute for the exclusive rights required by Ar ticle 16.1 of the TRIPS Agreement. As the Panel
notes, the United States indeed disagrees that Articl e 14(3) allows the EC authorities to refuse or
invalidate the registration of any confusing GIs.
26 But even if Article 14(3) does so allow, it still does
not satisfy the requirements of TRIPS Ar ticle 16.1. While Article 16.1 grants trademark owners the
right to prevent confusing uses of identical or similar GIs, Article 14(3) merely empowers the EC
authorities to deny registration of GIs in some circumstances.27

64. The Panel asks whether three registered GI s "could ... be used in accordance with their
registrations in a way that results in a likelihood of confusion with the respective trademarks." The
short answer to the Panel's question is "yes." Howe ver, as the United States has emphasized in this
dispute, neither the EC nor the owners of the tr ademarks cited by the Panel will necessarily know
from a GI registration alone to what uses the GI will be put or whether those uses will result in a
likelihood of confusion with a trademark. That question depends on what uses an individual GI
rightholder employs, and the perceptions of consumers in a given territory with respect to those uses.

26 See US Oral Statement at First Meeting, paras. 52-53; US Second Written Submission, paras.
142-166; US Opening Oral Statement at Second Meeting, paras. 84-86; US Closing Statement at Second
Meeting, para. 19.
27 See US Oral Statement at First Meeting, paras. 54-55; US Responses to Questions, para. 87; US
Second Written Submission, paras. 130-141; US Opening Or al Statement at Second Meeting, paras. 77-83; US
Closing Statement at Second Meeting, paras. 17-18.

65. First, the EC has asserted that the register ed name can only be used in accordance with the
"specific labelling details" included in a product specification. 28 The United States does not have
access to the product specifications for any of the th ree GIs cited by the Panel. In fact, despite
repeated requests to the EC,29 the United States has not been given a copy of the product specification
for the GI included in item (b) to the Panel's que stion. (In any event, as the United States has
demonstrated,30 the "specific labelling details" included in product specifications do not necessarily
offer much guidance regarding limits on uses of the GI.)

66. Second, the EC has clarified that registration of a GI gives an owner the right to use the GI in
a "trademark-like manner."
31 In and of itself, nothing in the TRIPS Agreement prevents such a use.
The United States has no objection to the use of a GI in a trademark-like fashion, featured
prominently on a label, because GIs are valuable source identifiers and qua lity indicators – like
trademarks. However, the TRIPS Agreement does not allow a GI to be used in a trademark-like
fashion if prior valid trademark rights exist in that territory and consumers would likely be confused
with respect to those trademarks. Further, the fact that a GI registration gives the owner the right to
use the GI in a trademark-like fashion highlights that the scope of permitted uses is not as simply
characterized as, in the EC's wo rds, "use [of] the name registered as a geographical indication."
32
Indeed, to the contrary, it raises the specter of GIs be ing used in a way that could raise a likelihood of
confusion with a trademark. The EC stated in its oral statement at the second meeting, at
paragraph 184, that:

EC consumers are familiar with the use of geographical indications for foodstuffs.
They value them as much as trademarks when making their purchasing decisions, if
not more, and expect them to be used in wh at the United States calls "trademark-like"
fashion.
67. In this connection, the United States points out that the EC itself explains the trademark
owner's possible rights in very qualified terms: "a court would be entitled to find, depending on the
specific circumstances of each case, that the 'used sign' is different from the 'registered sign' and,
therefore, not protected under Regulation 2081/92."
33 The "possibility" that a trademark owner may
be able to show that the use is not "protected" by the EC GI Regulation is a far cry from his ability to
prevent all confusing uses of similar signs, whether or not "protected", which is what Article 16.1 of
the TRIPS Agreement requires.

68. Third, it appears that the registration of a term under the EC GI Regulation gives the
rightholder a positive right to use that term as transl ated into other EC languages, and the EC has not
provided any information or arguments to the contrary.
34 For example, as the United States has
already noted,35 in trademark infringement proceedings pending before the Swedish courts, a Czech
brewer has argued that registration grants the ri ght to use the registered GIs "Budejovické pivo,"

29 See US Responses to Questions, para. 68.
30 US Opening Oral Statement at Second Meeting, para. 78, and Exhibit US-77.
31 EC Oral Statement at Second Meeting, para. 184.
34 The EC has stated that a GI re gistration "covers only the term ... and not its translations to other
languages." EC Second Written Submission, paras. 288, 293. Separately, the EC has stated that "the right
holders of a geographical indication have a positive right to use the name registered as a geographical
indication," and that "that right does not extend to other names or signs which have ... not been registered." EC
Second Written Submission, para. 301. However, the EC has not joined these two concepts, and does not
definitively state that the "positive right to use the name registered" excludes the right to use the name as it is
translated (accurately, of course) into other EC languages.

"Ceskobudejovické pivo," and "Budejovický mešt'anský var" in alleged translation, including as
"Budweiser Budvar," "Budweis," and "Budbräu."
36 Similarly, the United States has noted that the
root of the registered GI "Bayerisches Bier," when translated into English, is "Bavaria."37 In some EC
member States in which the name BUDWEISER, B UD or BAVARIA are registered as a prior valid
trademark, use of the registered GIs as so tran slated might confuse consumers, and the trademark
owners would need their TRIPS Article 16.1 rights to prevent those uses. Notably, in allowing the
registration of "Bayerisches Bier" the Commission di d not state that the GI could not be used in
translation, which would have been an obvious respon se to the concern that use of the GI could result
in confusion with the "Bavaria" trademark.

69. Fourth, whether the use of a re gistered GI results in a likelihood of confusion in the country in
which an identical or similar trademark is regist ered will depend on the perceptions and response of
consumers in that country. In some countries, cons umer surveys could show that particular uses of
the GIs listed in the Panel's question are confusing w ith respect to the trademarks listed in the Panel's
question. Under Article 16.1, rather than seeking rejection or cancellation of a GI registration on an
EC-wide basis, the owner of an identical or similar prior valid trademark registered in an EC member
State is entitled to prevent particular "uses" of the GI that confuse consumers in that member State. In
such a situation, rejection or cancellation of the GI registration on an EC-wide basis – the only option
even arguably available under Article 14(3) – may be neither appropriate nor necessary.
38 Of course,
rejection or cancellation of GIs that are prime facie confusing is also appropriate: the point is that
rejection or cancellation of a GI registration ca nnot be the only option open to trademark owners,
since Article 16.1 offers trademark owners the right to prevent confusing "uses" of identical or similar
signs.

70. The United States notes two examples in which actual likelihood of confusion has been found
between terms similar to those included in item (b) of the Panel's question. First, a South African
court confirmed the decision of the Tribunal of the Registrar of Trademarks to refuse the registration
of trademark applications for BUDEJOVICKÝ BUDVAR, following opposition brought by the
owners of prior trademarks BUDWEISER and BUD. The decision explains that the average South
African consumer would tend to abbreviate BUDEJOVICKÝ BUDVAR to the first syllable, BUD,
since the whole mark is difficult to pronounce. At the same time, the decision held that
BUDWEISER is often shortened to BUD. Con sequently, the decision acknowledged a likelihood of
confusion between BUDEJOVICKÝ BUDVAR a nd prior trademarks BUDWEISER and BUD.
39
Similarly, in Italy, in a decision that pre-dated the Czech Protocol of Accession to the EU and the
registration of the GI listed in item (b) of the Pane l's question, the Italian distributors of the defendant
involved in the South Africa case was enjoined from using any designation with the words

36 See Exhibit US-53 (paras. 4-6, Section 3.2). The United States reiterates that the GI included in item
(b) of the Panel's question was registered via the C zech accession protocol to the EU. Validity of the
registration was and is not subject to challenge based on Article 14(3) of the EC GI Regulation (even under the
EC's reading of that provision). Even if the Panel acce pts the EC's reading of Artic le 14(3), the provision does
not serve as a substitute for TRIPS Ar ticle 16.1 rights with respect to GIs registered pursuant to accession
protocols. See US Closing Statement at Second Meeting, para. 18.
38 The United States also notes that the ability of a trademark owner to challenge a registration on the
basis of Article 14(3) is extremely limited, and in many cases – such as for GIs registered pursuant to accession
treaties or for "directly and individually concerned" trademark owners outside of the 2-month time period
following registration of the GI – does not exist at all. See US Second Written Submission, paras. 138-140; US
Opening Oral Statement at Second Meeting, para. 83; US Closing Statement at Second Meeting, para. 18.
39 Judgment of the High Court of South Africa, Case No. A9/03, Budweiser Budvar National
Corporation v Anheuser-Busch Corporation , 3 December 2003. Exhibit US-81. See also Decision of the
Tribunal of the Registrar of Trademarks of South Africa, Case No. 96/17026-29, Budweiser Budvar National
Corporation v Anheuser-Busch Corporation, 22 October 2002. Exhibit US-82.

"Budweiser" or "Bud", because of rights associated with the complainant's two prior trademarks,
BUDWEISER and BUD.40

71. In sum, the United States submits that there ar e myriad ways in which registered GIs can be
used in a manner that raises a likelihood of confusion with a registered trademark, and that those uses
will not necessarily be apparent from the registration itself.

Q138. What is the meaning of the phrase "[w]ith du e regard to Community law" in Article 14(2) of
Regulation (EC) No. 2081/92? Which aspects of "C ommunity law" are relevant? What is the
meaning of the phrase "shall not affect [Regulatio n No. 2081/92] ... and in particular Article 14
thereof" in Article 142 of Regulation (EC) No. 40/94 on the Community trade mark? EC

Q139. The Panel takes note of the EC's view that the owner of a trademark may not prevent the right
holders of a registered GI from using the registere d name on the grounds that such name is confusing
(EC second oral statement, para. 181). Please confirm that as long as a GI remains registered and is
used in accordance with its registration, a trademark owner may not enforce his trademark rights
against that use either under the Regulation on th e Community trademark or the national trademark
laws of the member States. What legal prov isions prevent the trademark owners exercising their
rights against persons using a GI in accordance with its registration? EC

Q140. Under what provision of Regulation (EC) No. 2081/92 does the registration of a GI give the
right holder a positive right to use the GI? How is that right delimited? Does it include translations
of the protected term? For example, what uses do the registrations of the four cheese GIs referred to
in Exhibit US-52 permit? How far does that po sitive right extend before it can be challenged under
labelling and misleading advertising laws? EC

Q141. What is the legal basis for an action to invalidate a registration under Regulation (EC)
No. 2081/92 on the grounds of c onfusion with a trademark? Is there any basis for an action to
invalidate a GI registration in Regulation (EC) No. 40/94 on the Community trade mark? EC

Q142. The Panel takes note of the EC's view t hat the owner of a concurrent trademark could
challenge a decision to register a GI inconsistently with Article 14(3) of Regulation (EC) No. 2081/92
even after the GI has been forma lly registered (EC response to Pane l question No. 67; EC rebuttal
paras.270 and 296). If a trademark owner a pplied to invalidate a GI registration under
Article 14(3):

 (a) is this a precondition to a trademark infringement action?

 (b) is there any time-limit on such an invalidation action?

 (c) is this possibility available where the GI is registered pursuant to an Act of Accession
or otherwise without the normal application procedures?

 (d) how would such an application for invalidation relate to the cancellation procedure
in Article 11a of the Regulation? Are the grounds for cancellation in Article 11a
exhaustive? EC

Q143. The Panel takes note that the Council D ecision to register BAYERISCHES BIER as a GI
states that "[i]n view of the facts and information available, it was, however, considered that
registration of [that name] was not liable to misl ead the consumer as to the true identity of the

40 Order of the Court of Milan, First Civil Division, Docket No. 464/02. Exhibit US-83. The
defendant's distributor consequently turned to the use of CZECHVAR in Italy.

product" (Exhibit EC-9, para. (3), cited in EC rebut tal, para. 287). Please detail what were the facts
and information to which the Council referred in that Decision and how they were evaluated so that
the Panel can see how the criteria in Article 14(3) were applied in that case. EC

Q144. The Panel takes note that Commission Regul ation (EC) No. 1107/96 (set out in Exhibit
COMP-3a), which effected the registration of many individual GIs, recites Article 14(2) and (3) of
Regulation (EC) No. 2081/92. How were Article 14(2) and (3) taken into account in the registration
of those GIs? EC

Q145. Please refer to Article 24.5 of the TRIPS Agreement and comment on the suggestion that:

 (a) the phrase "shall not prejudice eligibility for or the validity of the registration of a
trademark" merely creates an exception to the obligations in Articles 22.3 and 23.2 to
refuse or invalidate the registration of trademarks; and

 (b) the phrase "shall not prejudice ... the right to use a trademark" merely creates an
exception to the obligations in Articles 22. 2 and 23.1 to provide the legal means to
prevent certain uses and does not create any positive right. USA, AUS, EC

Response:

72. The United States agrees with the proposition that Article 24.5 is an exception to the
provisions of Part II, Section 3 of the TRIPS Agre ement. As such, Article 24.5 preserves certain
trademark rights vis-à-vis geographical indications. The two "s uggestions" appear to be consistent
with this understanding.
41

73. With respect to suggestion (a ), it appears that the reference in Article 24.5 to the "eligibility
for or the validity of the registration of a trademark" logically includes an exception to the obligations
under Articles 22.3 and 23.2 to invalidate or refu se registration of certain trademarks. Indeed,
Articles 22.3 and 23.2 are the only provisions of the GI section that speak directly to refusal of
registration or invalidation of trademarks.
42 Suggestion (a) demonstrates that Article 24.5 has no
effect on the exclusive rights granted to valid tr ademarks (because Articles 22.3 and 23.2 likewise
have no effect on the exclusive rights granted to valid trademarks) and is therefore fully consistent
with the US views in this dispute.

74. In addition, however, as argued previous ly by the United States, the prohibition on
"prejudic[ing] eligibility for or the validity of the registration of a trademark" is not limited to
situations where the choice is simply between registration, on the one hand, and total loss (or absence)
of registration, on the other. Otherwise, the word "prejudice" would not be given meaning. In fact,
the inclusion of the word "prejudice" suggests that the phrase "prejudice eligib ility for or the validity

41 The United States notes that even if this inte rpretation of Article 24.5 would seem to protect
trademarks that are misleading as to geographic origin, this effect is mitigated by certain limitations in
Article 24.5. For instance, there is a requirement that trademarks subject to the Article 24.5 exception must be
applied for, registered, or acquired through use "in good faith." Further, the exception in Article 24.5 prohibits
prejudicing certain trademarks "on the basis that such a trademark is identical with, or similar to, a geographical
indication". For purposes of this dispute, in any event, the United States' arguments are directed at those TRIPS
Article 16.1 rights associated with valid trademarks, and not with the effect of Regulation 2081/92 on
trademarks that are misleadi ng as to geographic origin. See US First Written Submission, para. 135 ("The
United States is not arguing that trademarks that 'mislead the public as to the true place of origin' of the
underlying goods in a given territory must be registered and provided Article 16.1 rights in that territory.").
42 However, the United States is not able to conc lude that Article 24.5 is "merely" or "only" an
exception to these Articles, as the text of Article 24.5 re fers to measures adopted to implement the GI section,
and not only to specific articles.

of the registration of a trademark" protects trademarks against something more than immediate
invalidation or refusal. As previously explained by the United States, this phrase further emphasizes
that owners of trademarks cove red by Article 24.5 are accorded the Article 16.1 right to prevent all
others from confusing uses, given that the legal authority accorded by trademark registration is
defined by Article 16.1, and that denial of the ri ght to prevent all confusing uses could diminish the
ability of the trademark owner to distinguish his goods, within the meaning of Article 15.1. 43 The
importance of the word "prejudice" is further confir med by the fact that it was specifically added by
the drafters after the Brussels draft. 44 Thus, while the United States agrees that "prejudice eligibility
for or the validity of the registration of a trad emark" provides an exception to the obligations under
Articles 22.3 and 23.2, it may also protect trademarks within its scope from implementation of the GI
section that would diminish a trademark owner's Article 16.1 rights.

75. Similarly, as for suggestion (b), the United States agrees that the phrase "shall not prejudice ...
the right to use a trademark" in Article 24.5 creates an exception to the obligat ions in the GI section,
including those in Articles 22.2 and 23.1 to prev ent certain uses, and does not create any positive
rights. Again, suggestion (b) also demonstrates th at Article 24.5 has no effect on the exclusive rights
granted to valid trademarks (because Articles 22.2 an d 23.1 likewise have no effect on the exclusive
rights granted to valid trademarks), and is fully consistent with the US views in this dispute.

76. But, given that the core use and value of a trademark comes from the Article 16.1 exclusive
right to prevent all others from confusing uses, the United States has explained that this phrase also
provides an exception to any implementation of the GI section that diminishes Article 16.1 protection
for the covered trademarks.
45 This follows from the ordinary meaning of "prejudice ... the right to use
a trademark", which refers to the harm or damage to the permitted or forbidden activity associated
with the application of a trademark to its purpose. 46 Based on the context of Articles 15.1 and 16.1 of
the TRIPS Agreement, this purpose is to allow a trademark's owner to distinguish his goods from the
goods of all others, which requires that trademark registrations accord their owners the right to
prevent all others from uses that would cause a likelihood of confusion.47

77. Significantly, these suggested readings of Artic le 24.5 contradict the EC's position that, by
negative implication, Article 24.5 gives permission to Members to strip covered trademarks of their
Article 16.1 rights.
48

Q146. The Panel takes note of the respective views of the EC and US on simultaneous exercise of
rights with respect to use (EC rebuttal, para. 309 and US rebuttal, para. 119). Without prejudice to
the EC's views on Article 24.5, would there be any practical conflict between the rights to prevent
certain uses conferred under Articles 16.1 and 22.2 of TRIPS? Under what circumstances is it
impossible for, simultaneously:

43 US Second Written Submission, paras. 173-174.
44 See US Responses to Panel Questions, paras. 99, 104; US Oral Statement at First Meeting,
paras. 64-65.
45 See US Second Written Submission, para. 176.
47 Id.
48 See, e.g., the EC summation of its Article 24.5 argument in its oral statement at paragraph 199:

If the drafters deemed necessary to specify in Article 24.5 that the implementation of protection for
geographical indications shall not prejudice the most basic right of the owner of a registered trademark
("the right to use it"), but not the right to exclude others from using it, the clear implication is that they
did not intend to prevent Members from limiting the exercise of the latter right in order to allow the use
of a geographical indication in co-existence with a grandfathered trademark. (Emphasis added.)

 (a) a trademark owner to prevent uses of a sign where such use would result in a
likelihood of confusion (under Article 16.1), and

 (b) a right holder in a GI to prevent uses of an indication that are misleading with
respect to the geographical origin of the product or which constitute unfair
competition (under Article 22.2) except on the basis that the trademark is identical
with, or similar to, the GI (under Article 24.5)? USA, AUS, EC

Response:

78. The EC posits that there is a "conflict" be tween TRIPS Articles 16.1 and 22.2 because "[t]he
simultaneous exercise" of a trademark that is mislea ding with respect to origin, and an identical or
similar GI that raises a likelihood of confusion w ith respect to the trademark, "would lead to a
situation where neither the trademark owner nor the right holders of the geographical indication could
use the sign in question."
49

79. This is incorrect. As the United States has already noted, 50 the EC is confusing a "conflict"
that may indeed occur between an individual tradem ark and an individual GI, and a "conflict" that
does not in any way occur between the obligations placed on the EC by Articles 16.1 and 22. As the
United States explained, it is in no way "impossible" for the EC to "simultaneous[ly] compl[y]" with
the obligations in Articles 16.1 and 22;
51 there is, therefore, no "conflict" between those obligations.

80. The Panel's question appears to be directed at the situation presented by a "conflict" between
an individual trademark and an individual GI. The TRIPS Agreement sets out rules specifying the
way in which this "conflict" would be reso lved. As the United States has explained, 52 if a trademark
misleads consumers as to the origin of goods, as the Panel posits in part (b) of its question, the TRIPS
Agreement and the Paris Convention provi de that it should not be registered. 53 The trademark will
not, therefore, be accorded the right to prevent the confusing uses of a similar or identical GI, as the
Panel posits in part (a) of its question, since it will not be registered. As the United States has also
explained,54 if such a trademark is nonetheless registered, it is subject to invalidation. 55 I n o t h e r
words, the facts envisioned by the Panel in part (b) of its question would serve as a defense to the
infringement claim brought by the trademark owner in part (a) of the question.

81. How a conflict between particular rightholders is resolved will depend on the particular facts
of the case and on the application of municipal law in the WTO Member in which the case is brought.
In the view of the United States, given the different standards for trademark rights and GI rights, it is
unlikely that there would be an irresolvable conflic t between those two rightholders. But this Panel is
not called upon to resolve all such disputes prospectiv ely in this proceeding. That is a matter for the
decision-makers in the WTO Member before which the particular dispute is brought. What is
important here is that the municipal law in that WTO Member is consistent with that Member's TRIPS
obligations. Those obligations include providing Article 16.1 TRIPS Agreement rights to trademark

50 US Opening Oral Statement at Second Meeting, paras. 71-72.
51 See Panel Report, Turkey – Textiles , para. 9.92. See also Panel Report, Indonesia – Autos ,
para. 14.28.
52 US Oral Statement at First Meeting, para. 42; US Second Written Submission, para. 120.
53 TRIPS Articles 22.3, 15.1, and 15.2; Paris Convention Articles 9, 10, 10bis and 6quinquiesB.
54 See US First Written Submission, para. 135; US Oral Statement at First Meeting, para. 42; US
Responses to Questions, para. 114; US Second Writte n Submission, paras. 119-121; US Opening Oral
55 TRIPS Articles 22.3, 15.1 and 15.2; Paris Convention Articles 9, 10, 10bis,and 6quinquiesB.

owners in situations encompassed by the EC GI Regulation, where signs used as a GI result in a
likelihood of confusion with a pre-existing trademark.

Q147. Article 24.5 as finally agreed contains the phrase "mea sures adopted to implement this
Section shall not prejudice eligibility for or the validi ty of the registration of a trademark, or the right
to use a trademark". Please comment on the s uggestion that during the Uruguay Round negotiations
there was a disagreement as to whet her the predecessor to this prov ision in the Brussels Draft should
be made permissive rather than mandatory, and that the choice of this language was part of an effort
to reach agreement on the issue of the mandat ory / permissive nature of the provision. USA, AUS,
EC

Response:

82. As an initial matter, the United States recalls that Article 24.5 should be interpreted in good
faith in accordance with the ordinary meaning of its terms, in their context and in the light of the
object and purpose of the TRIPS Agreement. Customary rules of interpretation provide a very limited
role for negotiating history, and fo r good reason. For example, in the case of the TRIPS Agreement,
as the Panel is undoubtedly aware, there is no comprehensive, official negotiating history. There were
numerous discussions, drafts, and memoranda between and am ong various WTO Members, both
before and after the Brussels Ministerial in late 1990, many unrecorded or for which there are no
agreed minutes or official documents. Accordingly, many would not fairly be considered useful as
"negotiating history." Nevertheless, the evolution of the drafts does suggest that there were two
opposing views about whether what is currently Article 24.5 should allow Members, at their
discretion, to protect certain trademarks vis- à-vis geographical indications or should require Members
to protect those trademarks. As the United States has explained, the evolution of Article 24.5 revealed
a progression in favor of stronger and clearer protect ion for covered trademarks. In addition to the
change from a permissive to a mandatory provisio n, the United States has also explained that, as
negotiations progressed, the term "prejudice" was intr oduced, and the specific mention of the "right to
use" a trademark was also integrated. 56 All of these modifications served to increase the protection
accorded to trademarks pursuant to Article 24.5.

83. It follows that the negotiating history confir ms the interpretation that Article 24.5 does not
diminish the rights accorded trademarks, as the EC a lleges, but that it instead provides a shield for
covered trademarks that would otherwise be affected by implementation of the GI section. This
history provides no support for the EC's argument that Article 24.5, by negative implication,
authorizes Members to strip covered trademarks of their Article 16.1 rights.
57

84. In addition, the predecessor to Article 24.5 in the Brussels draft stated that "A Party shall not
take action to refuse or invalidate [covered trademarks.]" 58 This provision, however, was entirely in
brackets, indicating a lack of agreement with respect to that obligation, which provided for mandatory
protection of covered trademarks. What emerged from the discussions among the Members
subsequent to the Brussels Ministerial was a text th at retained the mandatory nature of the protection

56 See US Responses to Panel Question 76, paras. 102-105.
57 See, e.g., the EC summation of its Article 24.5 argument in its oral statement at the second Panel
meeting, at paragraph 199:

If the drafters deemed necessary to specify in Article 24.5 that the implementation of protection for
geographical indications shall not prejudice the most basic right of the owner of a registered trademark
("the right to use it"), but not the right to exclude others from using it, the clear implication is that they
did not intend to prevent Members from limiting the exercise of the latter right in order to allow the use
of a geographical indication in co-existence with a grandfathered trademark. (Emphasis added.)
58 See Gervais, The TRIPS Agreement, Drafting Hi story and Analysis (Second Edition). Sweet and
Maxwell, London, 2003, p. 133 (emphasis added).

of covered trademarks, but instead of the broad formulation – "A Party shall not" – the final text
states that "measures adopted to implement [the GI] Section shall not prejudice ...", clarifying that this
obligation was directed, not at any and all measures of a Party, but at those adopted to implement the
GI Section of the TRIPS Agreement. Thus, th e suggestion that the final language resolved a
difference among the Members as to the mandatory or discretionary nature of the obligation in
Article 24.5 is not inconsistent with how Article 24.5 appears to have evolved.

Q148. What is the meaning of the phrase "where such use would resu lt in a likelihood of confusion"
as used in Article 16.1 of the TRIPS Agreement? How should such likelihood of confusion be
assessed? How does the a ssessment differ from that under Ar ticle 14(3) of Regulation (EC)
No. 2081/92? In particular:

 (a) how should the likelihood of confusion, and the liability to mislead the consumer, be
assessed with respect to a mark to which ri ghts have not been acquired on the basis
of use?

 (b) as of what time should the likelihood of confusion, and the liability to mislead the
consumer, be assessed?

 (c) are the trademark's reputation and renown and the length of time it has been used
necessarily relevant to both analyses? USA, AUS, EC

Response:

 (a) how should the likelihood of confusion, and the liability to mislead the consumer, be
assessed with respect to a mark to which ri ghts have not been acquired on the basis
of use?

85. The ordinary meaning of the term "confusi on," from Article 16.1, includes "failure to
distinguish."
59 The ordinary meaning of "likelihood" includes "that looks as if it would happen, be
realized or prove to be what is alleged or suggested; probable; to be reasonably expected." 60 Thus,
under the ordinary meaning of Article 16.1, a "lik elihood of confusion" arises where it is reasonably
expected that a trademark owner will no longer be able to disti nguish his goods from identical or
similar goods labeled with an identical or similar sign.

86. To further inform this interpretation, the United States discusses the factors commonly used
in EC law and member State jurisprudence to assess likelihood of confusion, in response to
question 148(c), below. As the Panel is aware, the "likelihood of confusion" standard was applied by
countries in national law well in advance of the negotiation and conclusion of the TRIPS Agreement.

87. The United States is not aware of any judicial interpretation of the "liable to mislead"
standard in Article 14(3). Article 14(3) has been applied by the EC administering authorities only
once. In that case, the Council simply determined that "[i]n view of the facts and information
available, it was ... considered that registration of the name 'Bayerisches Bier' was not liable to
mislead the consumer as to the true identity of the product."
61 The Council's decision offers no
insights into the factual elements informing its app lication of the "liable to mislead" standard in
Article 14(3).

59 New Shorter Oxford English Dictionary (Fourth Ed. 1993), pg. 478. Exhibit US-84.
60 New Shorter Oxford English Dictionary (Fourth Ed. 1993), pg. 1588. Exhibit US-84.
61 Council Regulation (EC) No 1347/2001, para. 3. Exhibit EC-9.

88. EC trademark law suggests that the "likelihood of confusion" standard is different from the
"liable to mislead" standard. The EC Trademark Regulation and Trademark Directive differentiate
between the two standards. Article 50.1(c) of th e Trademark Regulation and Article 12.2(b) of the
Trademark Directive provide for revocation of a tr ademark where it is "liable to mislead the public,
particularly as to ... geographical origin ..."
62 In contrast, Article 9.1(b) of the Trademark Regulation
and Article 5.1(b) of the Trademark Directive gran t trademark owners the exclusive right to prevent
use of a similar or identical sign for similar or identical goods where "there exists a likelihood of
confusion on the part of the public." 63 Accepting that "liable to mislead" in Article 14(3) actually
means "likelihood of confusion" would require the Panel to overlook the objective fact that those
standards are expressly differentiated in EC trademar k law. In addition, as discussed further below in
response to question 149, use of the term "mislead" in the GI Regulation itself indicates that that term
has a different meaning from "confusion" in the sense of Article 16.1.

 (b) as of what time should the likelihood of confusion, and the liability to mislead the
consumer, be assessed?

89. Likelihood of confus ion should be assessed at the time the allegedly confusing use arises.
Article 16.1 enables a trademark owner to prevent par ticular "uses" that are confusing. As a matter of
context, therefore, whether likelihood of confusi on arises should be based on consumers' perceptions
and response at the time the allegedly confusing use arises. While the United States does not object to
the opportunity to assess whether a GI, at the time of application for registration, likely confuses
consumers within a country in which the trademark is registered, TRIPS Article 16.1 requires that the
trademark owner also be permitted to prevent consum er confusion that arises because of and at the
time of particular uses of the GI.

90. Article 14(3) of the EC GI Re gulation is relevant to the EC authorities' decision to register a
GI. Thus, it appears to the United States that th e determination whether a GI is misleading with
respect to a trademark that enjoys reputation, renow n and length of use would be made at the time of
application to register the GI. In the "Bayeri sches Bier" case – the only time Article 14(3) has been
applied – the determination that the GI was not mi sleading with respect to prior valid registered
trademarks was evidently made by the Council at the time of application for registration of the GI.

 (c) are the trademark's reputation and renown and the length of time it has been used
necessarily relevant to both analyses?

91. In this dispute, the EC asserts that the refe rences to reputation, renown and use are included in
Article 14(3) merely because they are factors u sed to judge whether a GI raises a likelihood of
confusion with respect to a prior registered tradem ark. The EC notes that in EC and other Members'
laws, reputation, renown and lengt h of use are relevant to the determination of likelihood of
confusion.
64 While reputation, renown and length of use might indeed be considered to determine
whether a likelihood of confusion arises in certain cases, these factors are often, in many other cases,
irrelevant to whether there is a likelihood of conf usion under Article 16.1, as illustrated by the many
EC cases described further below.65

62 Regulation No 40/94, Article 50.1(c), Exhib it COMP-7; Directive 89/104/EEC, Article 12.2(b),
Exhibit COMP-6.
63 Regulation No 40/94, Article 9.1(b), Exhib it COMP-7; Directive 89/104/EEC, Article 5.1(b),
Exhibit COMP-6.
64 EC Oral Statement at Second Meeting, paras. 166-169.
65 Moreover, even without reviewing any EC cases, it should be evident that Article 16.1 requires a
presumption of "likelihood of confusion", without regard to reputation, renown, or length of time used, in the
case of identical signs used for identical goods.

92. In contrast, Article 14(3), by its own te rms, expressly requires that trademarks enjoy
reputation, renown and use to block registrati on of a GI. In other words, Article 14(3) requires that
these elements be present and considered in dete rmining whether to refuse a GI Registration – under
Article 14(3), they are always relevant and, in fact, necessary. The Commission's Guide to Regulation
2081/92 confirms this fact. The Guide emphasizes that the "general rule" is that "the registration of a
conflicting trademark does not prevent re gistration of the geographical name."
66 According to the
Commission, departure from this general rule to deny registration of a GI occurs "only in one
circumstance" – where the express terms of Article 14( 3) have been met, or in other words, when the
trademark satisfies the three prerequisites of reputation, renown and length of use. 67 "In all other
cases," the EC authorities revert to the "general rule" and register the GI, "notwithstanding the
existence of the registered trademark."68

93. In other words, establishing reputation, renown and use are not merely part of the EC
authorities' inquiry, under Article 14(3), into whet her the GI raises a likelihood of confusion with
respect to a prior, identical or similar trademark. Rather, for a prior valid registered trademark to
block registration of an identical or similar GI, the trademark must enjoy reputation, renown and use,
because Article 14(3) requires that a decision on GI registration be made "in the light of" these
factors. According to the Commission, this is the "one circumstance" in which the GI registration will
be denied.
69

94. Limiting Article 16.1 rights to owners of tho se trademarks that satisfy the requirements of
reputation, renown and length of use may be appropriate in one context – when determining whether
to extend the heightened scope of protection associated with well-known trademarks. Well-known
trademarks are protected against certain uses of identical or similar signs, even when used on
dissimilar goods or services.
70

95. For a trademark to be considered "well-known" and accorded this heightened protection, it
must satisfy the following criteria, under TRIPS Article 16.2: "knowledge of the trademark" by the
public, including knowledge "obtained as a result of the promotion of the trademark."

96. The ordinary meaning of these terms is inst ructive. The ordinary meaning of the term
"well-known" is "known to many, widely or generally known, famous," and "intimately or thoroughly
known."
71 The elements of "fame," as well as "wide" and "general" knowledge, accord well with the
EC's reference to "reputation and renown," in Article 14(3). Moreove r, the ordinary meaning of the
term "knowledge," as used in TRIPS Article 16.2, is, among other things, "familiarity gained by
experience."72 The "familiarity" part of this definiti on accords with the "reputation and renown"
criteria in Article 14(3). Additionally, familiar ity with a trademark is most likely "gained by

66 Guide to Community Regulations, "Protection of Geographical Indications, Designations of Origin
and Certificates of Specific Charact er for Agricultural Products and Foodstuffs" (Working Document of the
Commission Services issued by the European Commission Directorate-General for Agriculture, August 2004),
pg. 24. Exhibit EC-64; Guide to Community Regulations, "Protection of Geographical Indications,
Designations of Origin and Certificates of Specifi c Character for Agricultura l Products and Foodstuffs"
(Working Document of the Commission Services issued by the European Commission Directorate-General for
Agriculture, March 2004), pg. 23. Exhibit US-24. The United States notes that while the Commission made
certain self-serving amendments, during the course of these proceedings, to the description of Article 12(1)
ultimately included in the August 2004 version of the Guide, it made no amendments to the description of
Article 14(3), which remains unchanged from the March 2004 version of the Guide.
67 Guide to Community Regulations, August 2004, pg. 24. Exhibit EC-64.
68 Guide to Community Regulations, August 2004, pg. 24. Exhibit EC-64.
69 Guide to Community Regulations, August 2004, pg. 24. Exhibit EC-64.
70 See TRIPS Articles 16.2, 16.3.
71 New Shorter Oxford English Dictionary (Fourth Ed. 1993), pg. 3655. Exhibit US-84.
72 New Shorter Oxford English Dictionary (Fourth Ed. 1993), pg. 1503. Exhibit US-57.

experience" if the trademark is actually used, whic h corresponds to the "length of use" requirement in
Article 14(3).

97. Thus, while it may be appropriate to limit the heightened protection for well-known
trademarks to those trademarks that enjoy reputa tion, renown and use, a trademark need not satisfy
those prerequisites to secure the rights guaranteed by TRIPS Article 16.1.
73

98. Outside the context of well- known trademarks, this is certainly the case in EC and member
State law. EC
74 and member State 75 76 courts, as well as OHIM, 77 routinely find a likelihood of

73 The United States takes no position on whether Artic le 14(3) of the EC GI Regulation is consistent
with TRIPS Articles 16.2 and 16.3, or Article 6bis of the Paris Convention. For the purposes of this dispute, the
United States simply observes that Article 14(3) evokes well-established standards for well-known trademarks.
74 See, e.g. , Case T-129/01, Budmen/Bud, 3 July 2003, paras. 56, 42-59 (Owner of prior trademark
BUD opposed registration of BUDMEN for identical goods (clothing and footwear). CFI specifically found that
BUD did not enjoy reputation for the goods at issue, but nonetheless concluded that a likelihood of confusion
arose, based principally on the fact that the public might believe that products designated with BUDMEN
formed part of a new range of products marketed by the owner of BUD.); Case T-10/03, Conforflex/Flex, 18
February 2004, paras. 52, 40-62 (Owner of prior trademark FLEX opposed registration of CONFORFLEX for
identical goods (furniture). CFI rejected evidence submitted by the owner of FLEX regarding reputation of
prior trademark, but nonetheless concluded that a likelihood of confusion arose, due to the identity of the goods
and the close conceptual similarity of the signs at issue.); Case T-99/01, Mystery/Mixery, 15 January 2003,
paras. 35, 36-48 (Owner of prior trademark MIXERY unable to establish enhanced distinctiveness based on use
of its trademark, or reputation, but CFI nonetheless upheld OHIM's decision to deny registration of MYSTERY,
based upon a likelihood of confusion due to the similarity of both the signs and the goods (beer and beverages
containing beer).); Case T-6/01, Matratzen Markt Concord/Matratzen, 23 October 2002, paras. 28-48 (CFI
found likelihood of confusion, without treating the question of reputation or use of prior trademark
MATRATZEN, when reviewing OHIM's decision to deny registration of MATRATZEN MARKT CONCORD.
CFI based its decision on the similarity of the goods (textiles and furniture), and the similarity of the signs, in
particular inclusion of the element "Matratzen" in both signs.); Case T-104/01, Fifties/Miss Fifties, 23 October
2002, paras. 30-50 (CFI found likelihood of confusion, without any discussion of reputation or use of prior
trademark MISS FIFTIES, when reviewing OHIM's decision to deny registration of FIFTIES. CFI's decision
was based solely on the similarity of both the goods (clothing) and the signs at issue.). CFI decisions are
available, using the case number as a search term, at http://europa.eu.int/jurisp/cgi-bin/form.pl?lang=en.
75 See Judgment of the Court of Appeals of Munich, ArtDeco vs Deco Art , 6 June 2002, GRUR-RR
2003, pgs. 169-170 (Court considered registration of DECOART for perfumes and cosmetics as confusingly
similar to prior trademark ARTDECO for similar and iden tical goods. Court found that the two trademarks
ARTDECO and DECOART were confusingly similar, because the meaning/concept of the two marks was
similar, but expressly left open question whether prior mark enjoyed a wider scope of protection because of
prior use, basing its decision solely on the assumption that this was not the case, and that prior mark was of
average distinctiveness only.) (English excerpt and German version at Exhibit US-85); Judgment of the Federal
Patent Court, Aproma vs Artproma, 2 October 2002 as published in PAVIS PROMA database (Court considered
two trademarks APROMA and ARTPROMA as confusingly similar, since the services at issue (advertising,
marketing and consultancy services) were identical or at least very similar, and the sound of the two marks was
similar. Court held that prior trademark was of only average distinctiveness, since it had neither been shown
that it enjoyed a wider scope of protection due to wide spread prior use, nor that distinctiveness had been
weakened, either through third party use of similar marks, or because the designation was descriptive.) (English
excerpt and German version at Exhibit US-86); Judgment of the Federal Patent Court, 7hils vs. Stihl, 1 August
2000 as published in PAVIS PROMA database (Court considered use of trademark 7HILS for identical or
closely similar goods (motor and chain saws, and agricultural machines) to be confusingly similar to prior
trademark STIHL, given a high degree of graphic and phonetic similarity between the signs. Court expressly
held that likelihood of confusion existed not only with respect to goods for which prior mark had acquired a
reputation, but also with respect to those goods for which reputation was not established .) (English excerpt and
German version at Exhibit US-87); Judgment of the Court of Appeals of Cologne, Fiorini vs Fioccini , 13
September 2002, GRUR-RR 2003, pg. 71 et seq., at pg. 72 (Court considered trademark FIOCCINI to be
confusingly similar to prior trademark FIORINI, based exclusively on a comparison of the signs at issue and the
goods at issue. Court held that the goods (pasta) were identical, and that to exclude a likelihood of confusion in

such a situation, the two signs would have to have been, but were not, considerably different. Court dealt
expressly with the question whether pr ior trademark, FIORINI, enjoyed a wi der scope of protection because of
alleged widespread prior use, but determined that an extended scope of protection was unwarranted, since
reputation and extended prior use had not been properly presented to the court, let alone proven.) (English
excerpt and German version at Exhibit US-88); Judgment of the Federal Patent Court, AGCO vs. ARCO, 23 July
2002, as published in PAVIS PROMA database (Court found that high degree of phonetic similarity between
trademark AGCO and prior trademark ARCO raised a like lihood of confusion with respect to use on similar
goods (toys), simply assuming that prior trademark had ordinary distinctiveness, and without addressing
reputation or use.) (English excerpt and German version at Exhibit US-89); Judgment of the Hamburg Court of
Appeals, Cellofit vs Cellvit , 26 June 2003, GRUR-RR 2004, pgs. 5-7 (Court held that use of trademark
CELLVIT on identical or closely sim ilar goods (pharmaceutical products) raised a likelihood of confusion with
respect to prior trademark CELLOFIT (although a likelihood of confusion was not found with respect to use of
CELLVIT on less similar goods such as adhesive tape, beauty care products and cosmetics), without addressing
reputation or use of the prior trademark, and with finding that prior trademark was of regular to weak
distinctiveness.) (English excerpt and German version at Exhibit US-90); Judgment of the Cologne Court of
Appeals, Team is Money vs T-is Money , 7 June 2002, GRUR-RR 2002, pgs. 290-293 (Court found that use of
term "T-is money" raised a likelihood of confusion w ith respect to prior trademark TEAM IS MONEY, since
both signs were used for identical services (telecommunications), both were pronounced similarly, and both
alluded to slogan "time is money." Reputation and use of prior trademark played no part in court's decision.)
(English excerpt and German version at Exhibit US-91); Judgment of the German Federal Supreme Court,
Fläminger, 28 May 1998, GRUR 1998, pgs. 930-932 (Owner of prior trademark sought to enjoin use of
confusingly similar sign featuring an allegedly geographically descriptive term. Court upheld decision to block
registration of the confusingly similar term FLÄMINGER as part of a word/device mark, on the basis that it was
confusingly similar to prior trademark FÄLINGER, even though prior trademark enjoyed no reputation, no
renown and no lengthy prior use, and despite the fact that the word FLÄMINGER referred to the Eastern
German region of Fläming.) (English excerpt and German version at Exhibit US-92);
76 Judgment of the UK High Court of Justice, Origins Natural Resources Inc v. Origin Clothing
Limited, 17 November 1994, pg. 284 (Court found likelihood of confusion with respect to use of a similar sign
on identical goods even where the registered trademark had never been used. Where trademark has not been
used, court simply assumed that it would come into use at some stage, "in a normal and fair manner in relation
to the goods for which it is registered," and undertook a comparison "mark to mark," concluding that "[o]ne
cannot reasonably expect the public to distinguish be tween" registered trademark (ORIGINS) and similar sign
(ORIGIN) when used on identical goods.) (Exhibit US-93); Judgment of the UK High Court of Justice,
Chancery Division, British Sugar Plc v. James Robertson & Sons Ltd , January-February 1996, pg. 293 (Court
reiterated test that if prior mark had not been used, court would assume that it would come into use at some
stage, in a normal and fair manner in relation to the goods for which it is registered, and went on to make a
"mark to sign" comparison.) (Exhibit US-94); Judgment of the UK High Court of Justice, Chancery Division,
Wagamama Ltd v. City Centre Restaurants Plc and Another , July-August 1995, pgs. 731-732 (Court reiterated
test that if prior mark had not been used, court would assume that it would come into use at some stage, in a
normal and fair manner in relation to the goods for which it is registered, and went on to make a "mark to mark"
comparison.) (Exhibit US-95); Deci sion of the Appointed Person, React Trade Mark , 29 June 1999, pg. 288
(lines 13-19) (Tribunal noted that evidence relating to use of prior mark was withdrawn, and that comparison
was simply made on basis of "the degree of visual, aural and conceptual similarity" with the allegedly infringing
sign, assuming notional, fair use of the prior mark) (Exhibit US-96); Decision of the Appointed Person,
Balmoral Trade Mark, 18 August 1998, pg. 300 (lines 7-8) (Tribunal held that prior trademark "need not have
reputation" to enjoin use of similar or identical signs that raise a likelihood of confusion under Article 5(2) of
the Trade Marks Act (corresponding to Article 4(1)(b) of the EC Trademarks Directive)). Exhibit US-97.
77 See OHIM Board of Appeal, Case R 433/2002-3, Tei-Fu/Tai-Fun, 11 December 2002, paras. 32-43,
31, 28 (Board found that trademark TEI-FU raised a lik elihood of confusion with respect to prior trademark
TAI-FUN, based on the similarity of the goods covered, and the close phonetic and graphic similarity of the
signs. Board reached this conclusion despite express findings that no evidence had been submitted regarding
use of prior trademark, and that owner had not established any particular distinctiveness of prior trademark.)
(http://oami.eu.int/LegalDocs/BoA/2002/en/R0433_2002-3.pdf); OHIM Board of Appeal, Case R 49/2002-4,
Foris/Fortis, 17 March 2003, paras. 7-16 (Board found a likelihood of confusion between prior trademark
FORTIS and trademark FORIS, based sole ly on identity of the services at issue and the close similarity of the
signs, without any discussion of prior trademark's reputation or use.)
(http://oami.eu.int/LegalDocs/BoA/2002/en/R0049_2002-4.pdf); OHIM Board of Appeal, Case R 987/2002-1,

confusion without the trademark owner having establishe d that the trademark enjoys reputation,
renown or use . In fact, it is fair to say that in most standard cases arising in EC and member State
courts, reputation, renown and use are not at issu e. Only where the trademark and the allegedly
infringing sign are somewhat "less similar" does the trademark owner appeal to reputation to help
establish likelihood of confusion and entitlement to a broader scope of protection. In the more
common case, the court makes a judgment regarding the likelihood of confusion based simply on a
comparison of the similarity of the two signs and the similarity of the goods or services at issue.

99. The United States makes one final point rega rding the relevance of "reputation" to the
determination of likelihoo d of confusion in EC law. As not ed in the United States' second written
submission, only those provisions of the EC Trademark Regulation and Trademark Directive
concerning heightened protection against uses of confusing identical or similar signs on dissimilar
goods make specific reference to the need to establish "reputation."
78 If, as the EC asserts in this
dispute, reputation is also necessary to prove like lihood of confusion with respect to identical or
similar signs on identical or similar goods, it would seem to render void or redundant the considered
references to "reputation" included in the Trademark Regulation and the Trademark Directive. Such a
finding would not be consistent with an objective assessment of the facts.

Q149. What are the differences between "confusion" and "misleads" as used in Articles 16.1 and
22.2 of the TRIPS Agreement, respectively? Do they have any bearing on the misleading standard
under Article 14(3) of Regulation (EC) No. 2081/92? USA, AUS, EC

Response:

100. The ordinary meaning of the term "confusi on," from Article 16.1, includes "failure to
distinguish."79 The ordinary meaning of the term "mislead," from Article 22.2, includes "cause to
have an incorrect impression or belief" and "lead or guide in the wrong direction." 80 As Australia has
argued,81 these two terms, in their context, are di stinguishable. When Article 22.2 speaks of
preventing uses that "mislead[ ] the public as to the geographical origin of the good," it speaks of uses
that lead the public to believe, incorrectly, that th e origin of the good is other than its true place of
origin. When Article 16.1 accords a trademark owner the right to prevent uses that "would result in a
likelihood of confusion," it speaks to uses that unde rmine the ability of the owner to distinguish its
goods from those goods using an identical or similar sign.82

101. Additional context points to distinctions be tween the two standards. The standard in
Article 16.1 is whether the uses of an iden tical or similar sign would result in a " likelihood of
confusion," while the standard in Article 22.2 is whether uses of that sign "mislead[ ] the public."

Zelecta/Zelletra, 4 February 2004, paras. 24-3 0 (Board found that trademark ZELECTA raised a likelihood of
confusion with respect to prior trademark ZELLETRA, ba sed solely on identity of the goods (and, for one
category of goods, the similarity of those goods), and the close phonetic and visual similarity of the signs,
without any finding that prior trademark enjoyed reputation or use.)
(http://oami.eu.int/LegalDocs/BoA/2002/en/R0987_2002-1.pdf).
78 US Second Written Submission, para. 150 (note 131), citing Council Regulation (EC) No 40/94 of
20 December 1993 on the Community trade mark, as amended, Articles 8(5), 9(1)(c) (Exhibit COMP-7.a); First
Council Directive of 21 Dece mber 1988 to approximate the laws of the Member States relating to trade marks
(89/104/EEC), as amended, Articles 4(3), 4(4)(a), 5(2) (Exhibit COMP-6.a).
79 New Shorter Oxford English Dictionary (Fourth Ed. 1993), pg. 478. Exhibit US-84.
80 New Shorter Oxford English Dictionary (Fourth Ed. 1993), pg. 1791. Exhibit US-84.
81 See Australian Oral Statement at Second Meeting, para. 15.
82 The EC Court of First Instance has stated that "the likelihood that the public might believe that the
goods or services in question come from the same undertaking or, as the case may be, economically-linked
undertakings, constitutes a likelihood of confusion." Case T-388/00, ILS/ELS, 23 October 2002, para. 44.
Exhibit US-98.

Under Article 16.1, a trademark owner need only show that confusion will likely result. In contrast,
under Article 22.2, an interested party must show that the public is actually misled.

102. The Panel's second question is whether the "likelihood of confusion" and "misleads the
public" standards in TRIPS Articles 16.1 and 22.2 ha ve any bearing on the "liable to mislead the
consumer" standard in Article 14(3) of the EC GI Regulation. Although both Article 14(3) of the EC
GI Regulation and TRIPS Article 22.2 use the term "mislead," there is no specific indication in the
Regulation that Article 14(3) was modeled on Article 22.2. In fact, the Article 22.2 standard seems
rather to have been adopted by the EC in Article 13(1)(d) of the Regulation. (The "misleading"
standard included in TRIPS Article 22.3 is simila rly tracked in Article 50.1(c) of the Trademark
Regulation and Article 12.2(b) of the Trademark Directive.
83)

103. Virtually the only common term used in Ar ticle 14(3) and TRIPS Article 16.1 is the word
"trademark." The United States does not therefore see any indication that Article 14(3) was drafted
with any regard for the standard in Article 16.1, or that Article 16.1 has any bearing on the reading to
be given Article 14(3). The EC has appropriately used the "likelihood of confusion" standard in its
internal legislation in connection with WTO obliga tions: that is the specific standard adopted in
Article 9.1(b) of the Trademark Regulation an d Article 5.1(b) of the Trademark Directive.
84 A fair
inference can be drawn that when the EC meant to use the likelihood of confusion standard, it did so
expressly.

104. The word "mislead" appears to be used th roughout the EC GI Regulation in the sense of
affirmatively leading the public to believe something about the product that is not true, e.g., that the
product comes from a place other than the true place of origin.
85 This is in contrast to the term
"confusion", which appears generally to be used in the Article 16.1 sense of a failure or inability to
distinguish.86 This distinction also appears in the e qually authentic French versions of the GI
Regulation, which renders "confusion" as "confusion", but renders "mislead" as a more affirmative act
of leading the public to believe something untrue. 87 This distinction strongly suggests, as a factual
matter, that "liable to mislead" in the sense of Ar ticle 14(3) cannot be read as meeting the "likelihood
of confusion" standard of Article 16.1.

105. Further, as the United States has explained elsewhere,
88 the reference in Article 14(3) to
trademarks with reputation, renown and some lengt h of use is consistent with the definition of
well-known or famous marks offered in TRI PS Articles 16.2 and 16.3, as well as Article 6 bis of the
Paris Convention. Similarly, the prerequisites in Article 14(3) track the factors for determination
whether a trademark is well-known that are recorded in Article 2(1)(b) of the Joint Recommendation
Concerning Provisions on the Protection of We ll-Known Marks, adopted by the Paris Union
Assembly and the WIPO General Assembly. 89 Additionally, in adopting recent amendments to its
laws upon accession to the EC, an EC member State char acterized its understanding that Article 14(3)

83 Regulation No 40/94, Article 50.1(c), Exhib it COMP-7; Directive 89/1 04/EEC, Article 12.2(b),
Exhibit COMP-6.
84 Regulation No 40/94, Article 9.1(b), Exhibit COMP-7; Directive 89/104/EEC, Article 5.1(b), Exhibit
COMP-6.
85 See, e.g., Articles 3.2, 6.6, 13.1(c), 13.1(d), and 14(3) of the EC GI Regulation.
86 See, e.g., Articles 6.6, 7.5(b), 12(2), 12b(3) and 12d(3) of the EC GI Regulation.
87 E.g., "induire le [public/consommateur] en erreur quant à la veritable origine du produit" (Articles
(Article 6.6); "induire en erreur les consommateurs" (Article 6.6); and "fallacieuse quant à la provenance,
l'origine" (Article 13.1(c).

tracks the factors for determining whether a trademark is well-known.90 Moreover, the EC Trademark
Regulation and Trademark Directive similarly refe r to "reputation" as a prerequisite for the
heightened protection associated with well-known marks.91

Q150. The United States refers to the possibility of informing "consumers about the origin of a
product and its characteristics through the use of de scriptive terms in a non-trademark sense without
affirmatively confusing the consumer about the so urce of goods" (US response to Panel question
No. 75(b)). Would the addition of such a requirement in Article 14 of Regulation (EC) No. 2081/92 in
respect of either prior trademarks, later geographical i ndications, or both, satisfy the requirements of
Article 16.1 of the TRIPS Agreement in the view of the United States? Or does the United States
object to any later protection of a geographical indi cation that is confusingly similar to a prior
trademark? USA

Response:

106. It would appear that the particular inconsis tencies with Article 16.1 identified by the United
States in this dispute might be addressed if the GI Regulation were to incorporate the substantive
disciplines of EC trademark law into Article 14(2), or elsewhere in the Regulation. In fact, as the
United States has explained, the Committee on Legal Affairs and the Internal Market of the European
Parliament proposed just such an amendment.
92 This proposal would have added the following
language to Article 14(2):

This Regulation shall be without prejudice to the right accorded under the laws of the
Member States and/or Council Regulation (EEC) No 40/94 of 20 December 1993 on
the Community trade mark to bring proceedings for infringement of the right
embodied in a trade mark conforming to the conditions set out in the first sentence of
this paragraph on account of the use of a designation of origin or geographical
indication subsequent to that trade mark, be it under the civil, administrative, or
criminal law of the Member States.
93
This language would address these inconsistencies w ith Article 16.1, assuming that it fully maintains
and incorporates the substantive rights of exclusivity of prior trademarks, consistent with Article 16.1
of the TRIPS Agreement. As the United Stat es understands it, this amendment would allow
trademark owners to exercise their TRIPS Article 16. 1 rights, but would also provide for fair use and
other exceptions pursuant to EC and member State trademark laws, consistent with TRIPS Article 17.
107. Finally, the United States again notes that it is difficult to understand how "fair use of
descriptive terms" might apply to registered GIs (pur suant to Article 2(3) of the GI Regulation) that
are not geographic names (e.g., Feta).

90 US Second Written Submission, paras. 148-149. The EC asserts that the amended provision of
Hungarian law cited by the United States in Exhibit US-59 "applies to products not covered by Regulation
2081/92." EC Oral Statement at Second Meeting, para. 17 2 (tiret 3). This rebuttal is beside the point. The
important point is that in the Hungarian government's view, Article 14(3) applies to "well-known mark[s]." See
Exhibit US-61. The EC had previously asserted that the EC member States agree with its position, in this
dispute, that Article 14(3) denies registration to GIs that mislead with respect to all trademarks. EC Responses
to Questions, paras. 172-174. Exhibit US-61 demonstrates that the EC's assertion is untrue, and that some
member States agree that Article 14(3) denies registra tion only to those GIs that mislead with respect to
well-known trademarks.
93 Exhibit US-21, at pp. 13-14.

Q151. Please comment on the suggestion that Artic le 24.3 of the TRIPS Agreement was inserted in
the draft text in November 1991 to make it clear that th e exceptions provisions in Section 3 of Part II
could not be used as a justification for diminish ing a Member's pre-existing protection of GIs. USA,
AUS, EC

Response:

108. The United States agrees that Article 24.3 is an exception to Part II, Section 3 of the TRIPS
Agreement. As the United States has explained, this is evident both from the heading to Article 24
("International Negotiations; Exceptions"), as well as th e introductory clause that limits its scope to
actions taken "[i]n implementing this Section".
94

109. Given that the other exceptions in Article 24 cons titute an important part of Part II, Section 3,
it is reasonable to read "In implementing this Sec tion" as incorporating meas ures taken to implement
the other exceptions, when such measures could dimi nish the protection of individual GIs that existed
in that Member prior to entry into force of the WTO Agreement. However, the ordinary meaning of
the phrase "In implementing this Section" is not limited to implementation of Article 24, but would
seem to also apply, where appropriate, to measures taken to implement aspect s of other provisions of
the GI section that could diminish the protection of individual GIs protected prior to entry into force
of the WTO Agreement.

110. Nevertheless, the Panel's s uggestion regarding Article 24.3 is not only consistent with a
textual and contextual interpretation of Article 24.3 as an exception to the obligations in the GI
section. It also directly contradicts the EC's views that (1) Article 24.3 is not
 an exception (despite
clear language and context to the contrary) and (2) it in fact imposes an additional obligation on the
EC not to modify its GI protection system in any way, despite its inconsistencies with the trademark
obligations under the TRIPS Agreement.

Q152. If a Member is obliged to diminish the pre-existing protection of GIs in order to allow
trademark owners to exercise their rights under Article 16.1 as against GIs, does that obligation not
arise under Article 16.1 rather than "[i]n implementing this Section", as used in Article 24.3? EC

Q153. Without prejudice to the EC's view that a GI confusingly similar to a trademark will not be
registered, if one were registered nevertheless, in what way would this exception be "limited"? In
particular, could the rights of the GI owner be limited in such a way as to minimize the likelihood of
confusion? EC

Q154. What, specifically, are "the legitimate int erests of the owner of the trademark and of third
parties" within the meaning of Article 17? How c an legitimate interests be "taken into account"
under Article 17 where they conflict with other relevant interests? USA, AUS, EC

Response:

111. An "interest" is defined as "[t]he fact or rela tion of having a share or concern in, or a right to,
something, esp. by law" or "[t]he relation of being involved or concerned as regards potential
detriment or (esp.) advantage."
95 "Legitimate" refers to "[g]enuine ", "[c]onformable to, sanctioned or
authorized by, law or principle"; "normal, regul ar, conformable to a recognized standard type." 96

94 US Second Written Submission, paras. 189-190.
95 New Shorter Oxford English Dictionary (Fourth Ed. 1993), pg. 1393. Exhibit US-84.
96 New Shorter Oxford English Dictionary (Fourth Ed. 1993), pg. 1563. Exhibit US-84.

Thus, a "legitimate" interest arises wh en a party has a concern that is recognized either by law, or by
other types of normative standards.97

112. Article 17 does not specifically list the types of "legitimate interests of the owner of the
trademark and of third parties" that must be taken into account when providing limited exceptions.
Immediate context, however, provides important guidance.

113. The largest and most obvious set of third par ties affected by trademarks are consumers who
make decisions in the marketplace based on their asso ciation of a trademark with a product. When
Article 16.1 provides rights to trademark owners to prevent uses that "would result in a likelihood of
confusion", the "confusion" that is avoided is confusion on the part of consumers who are making
purchasing decisions based on trademarks. Therefore, "legitimate interests of ... third parties", under
Article 16.1, includes the interests of consumers not to be confused by signs. Anything that results in
a likelihood of confusion for consumers is not in their legitimate interests. Moreover, consumers
benefit from a strong trademark system, generally, as trademarks encourages fair competition among
producers and provide valuable info rmation to consumers about the pa rticular products that they are
purchasing.

114. Another type of relevant third party consists of those parties that have licenses to
affirmatively use a trademark, or to exclude othe rs from using the mark. This is evident from
Article 16.1, which refers to "all third parties not having the owner's consent ", and which implies that
third parties with the trademark owner's consent have th e right to use identical or similar signs. It is
also evident from TRIPS Article 21, which refers to licensing of trademarks. The legitimate interest
of the licensees are tied directly to those of the trademark owner, as their license agreements are
accorded value as a result of the Article 16.1 right s accorded to the trademark owner (or licensed to
the licensee).

115. As for the "legitimate interests of the owner of the trademark", such interests are also evident
from the context provided by Articles 16.1 and 15.1 of the TRIPS Agreement. Trademark owners
have a legitimate interest in exercising their exclus ive right to prevent all others from confusing use,
as this maintains the value of the trademark, a nd preserves the investments made to promote the
trademark and associated products to the public in a territory ( i.e., through advertising, etc.).
98 I n
other words, trademark owners have a legitimate interest in preventing competitors from inducing
consumers to buy competing produc ts based not on the quality of the competing product, but instead
on an inaccurate belief that they are buying the product associated with the trademark. In addition to
harming consumers, this reduces the economic value of the trademark, and the profits of the
trademark owner's business.

116. This consideration is consistent with the analysis of the US – Section 110(5) panel which,
when interpreting the phrase "legitimate interests of the right holder" in the context of the copyright
section, explained as follows:

In our view, one – albeit incomplete and thus conservative – way of looking at
legitimate interests is the economic value of the exclusive rights conferred by
copyright on their holders. It is possible to estimate in economic terms the value of
exercising, e.g., by licensing, such rights. That is not to say that legitimate interests
are necessarily limited to this economic value.
99

97 See Panel Report, US – Section 110(5), para. 6.224.
98 See infra Response to Question 155, regarding the extent to which these exclusive rights could be
limited pursuant to Article 17 of the TRIPS Agreement.

Similarly, the "legitimate interests of the owne r of the trademark" encompasses the interests in
preserving the economic value of the exclusive rights conferred by a trademark.

117. Moreover, a trademark owner has a legitimate inte rest in ensuring that its trademark continues
to be capable of distinguishing the goods or services of its undertaking from those of other
undertakings, within the meaning of Article 15.1. If others are able to dilute the value of the
trademark by using it on their products without th e consent of the trademark owner, then this
diminishes the capability of the sign to distinguish its goods or services, and may even result in total
loss of the trademark.
100

118. With respect to the relationship among the legitim ate interests, it seems that the interests of
the trademark owners, licensees, and consumers do not conflict at all, as they all benefit from
enforceable Article 16.1 rights, which preserve the value of the trademark for the trademark owner
and licensee, at the same time that they prevent confus ion of the consumers. This is quite different
from the patent context, for example, where the s hort term interests of the consumers (to purchase
cheaper products) may differ from the short term in terests of the patent holder (to profit from the
invention and recover the associated research and development expenses).

119. To the extent that "legitimate interests ... of th ird parties" include the interests of producers in
providing information to consumers about the geographi cal origin of the product, or in using a purely
descriptive term, and the corresponding interests of consumers in receiving such information, these
interests may also be taken into account, but only to the extent that they "provide limited exceptions to
the rights conferred by a trademark" and do not require ignoring the legitimate interests of the
trademark owner, pursuant to Article 17. As the United States has explained, the phrase "limited
exception" refers to "a narrow exception - one wh ich makes only a small diminution of the rights",
where "limited", is "measured by the extent to whic h the exclusive rights" of a trademark have been
curtailed.
101

120. By contrast, as the United States has detailed elsewhere, the blanket exception to trademark
rights in Article 14(2) of the GI Regulation is not a "limited exception" and does not take into account
the interests of anyone other than producers of certa in agricultural products in the EC who have rights
to use a registered GI. Under the EC's interpretation of TRIPS Article 17, all uses of a registered GI
are automatically entitled to the "fair use" exception, no matter what the facts of the particular case at
hand (i.e., whether the use is fair, the term is descriptiv e, or the legitimate interests of the trademark
owner are considered), by simple virtue of registration alone. It is an exception that harms consumers,
as they will purchase products that they do not in tend to purchase because of confusion over the
name.

Q155. Does an exception to the exclusive right in Article 16.1 presuppose a certain degree of
confusion? Does "fair use of descriptive terms" wi thin the meaning of Article 17 include the use of a
trademark to indicate source? USA, AUS

Response:

121. As the United States explained in its second oral statement, TRIPS Article 17 does
contemplate some curtailment of the rights granted in Part II, Section 2 of the TRIPS Agreement, but
the provision explicitly states that such curtailment for any given trademark must be limited.
102 Given

100 US Opening Oral Statement at Second Meeting, para. 90; US Second Written Submission,
para. 174.
101 US Opening Oral Statement at Second Meeting, para. 100, quoting Panel Report, Canada - Patent
Protection, paras. 7.30-7.31. See infra US Response to Question 155.
102 US Opening Oral Statement at Second Meeting, para. 102.

that Article 17 refers to limited exceptions to th e "rights conferred by a trademark", and Article 16
(including Articles 16.1, 16.2, and 16.3) defines the "Rights Conferred", it is logical that Article 17
presupposes a certain degree of likelihood of confusi on for a particular trademark within the meaning
of Article 16.1. By its very terms, however, Ar ticle 17, unlike the GI Regulation, does not permit
virtually unlimited exceptions, simply because tho se exceptions relate to the rights of a limited
number of trademarks.103 Nor does Article 17 permit the unlimited degree of likelihood of confusion
allowed by the GI Regulation. Finally, with speci fic textual references to the rights conferred by "a"
trademark and the legitimate interests of the owne r of "the" trademark, Article 17 does not permit
automatic entitlement to an exception, without cons ideration, for example, of whether the "use" at
issue is "fair," or the "terms" at issue are "descriptive."

122. As noted above, under the EC's interpretation of TRIPS Article 17, uses of a registered GI are
automatically entitled to the "fair use" exception, by simple virtue of registration alone. The EC has
failed to explain, nor can it, how a blanket excep tion, requiring trademark owners to sell their
products alongside the products of an unlimited number of producers using identical or similar GIs,
for an unlimited amount of time, and with an unlimited degree of consumer confusion, is a "limited
exception".

123. With respect to the Panel's question about wh ether "fair use of descriptive terms" within the
meaning of Article 17 includes the use of a trademar k to indicate source, the answer is No. As the
United States explained during its second oral stat ement, a "descriptive" term is one that is
"characterized by description", where description re fers to "[a] detailed account of a ... thing."
Trademarks are a form of intellectual property, with associated rights, that are not merely
"descriptive." According to TRIPS Article 15.1, for example, only those signs that are "capable of
distinguishing the goods or services of one unde rtaking from those of other undertakings" may
constitute a trademark. Thus, trademarks are not merely descriptive and can not be considered
"descriptive terms" within the meaning of Article 17.

Q156. Why do the requirements in Article 17 diff er from those in Articles 13, 26.2 and 30 of the
TRIPS Agreement? How should their interpretation reflect those differences? USA, AUS, EC

Response:

124. Beginning with the text of the provisions themselves, Article 17, the trademark exception,
states:

Members may provide limited exceptions to the rights conferred by a trademark, such
as the fair use of descriptive terms, provide d that such exceptions take account of the
legitimate interests of the owner of the trademark and of third parties.
125. Article 13, the copyright exception, states:

Members shall confine limitations or exceptions to exclusive rights to certain special
cases which do not conflict with a normal exploitation of the work and do not
unreasonably prejudice the legitimate interests of the right holder.
126. Article 26.2, the industrial design exception, states:

Members may provide limited exceptions to the protection of industrial designs,
provided that such exceptions do no t unreasonably conflict with the normal
exploitation of protected industrial designs and do not unreasonably prejudice the

103 US Opening Oral Statement at Second Meeting, para. 102.

legitimate interests of the owner of the protected design, taking account of the
legitimate interests of third parties.
127. Article 30, the patent exception, states:

Members may provide limited exceptions to the exclusive rights conferred by a
patent, provided that such exceptions do not unreasonably conflict with a normal
exploitation of the patent and do not unreasonably prejudice the legitimate interests of
the patent owner, taking account of the legitimate interests of third parties.
128. The first apparent difference between the latter three exceptions and Article 17 is the
reference in Articles 13, 26.2 and 30 to "normal exploitation." Exceptions to copyright may not
conflict with "a normal exploitation of the work"; exceptions to industrial design protection may not
"unreasonably conflict with the normal exploitation" of the design; and exceptions to patent rights
may not "unreasonably conflict with a normal exploitation of the patent". This difference is based on
the difference in the nature of the intellectual pr operty right. Copyrighted works, industrial designs,
and patents are all subject to "exploitation" by the rightholder by, for example, including the protected
work, industrial design, or invention in a product for use or sale – or licensing others to do so. It is
possible for exceptions to rights to conflict eith er not at all (copyrights) or not unreasonably
(industrial designs and patents) with "a normal exploitation". Furthe r, exceptions might conflict with
an "exploitation" of the copyright, industrial d esign or patent, without conflicting with a "normal"
exploitation, which implies a normative standard for what is "normal".
104

129. By contrast, a trademark owner is provided th e exclusive right to prevent uses of signs that
cause a likelihood of confusion with respect to th e trademark. That right is not subject to
"exploitation" in the same sense as the "exploitation" of a copyrighted work, protected industrial
design, or patented invention. Unlike in other intellectual property areas, therefore, Article 17 does
not permit exceptions that would conflict with any exploitation of the trademark – normal or not – and
does not permit reasonable conflicts with "a no rmal exploitation", because any conflict with
trademark rights goes to the heart of the trademark ow ner's legitimate interest. Therefore, there is no
need for Article 17 to provide for exceptions that conflict with an "exploitation" of the trademark.

130. Similarly, Articles 13, 26.2, and 30 permit exceptions that "do not unreasonably prejudice the
legitimate interests of the" intellectual property right holder. Article 17, by contrast, requires that any
exceptions "take account of the leg itimate interests of the owner of the trademark." This, too, is
explained by the differences in the intellectual property rights concerned. A WTO Member might
permit businesses to make performances of copyright ed works through "homestyle" audio equipment
because it had been shown that copyright owners di d not derive much revenue from such use, and
thus the use did not unreasonably prejudice the leg itimate interests of the copyright holder. A WTO
Member might permit persons other than the patent holder to make drugs covered by a patent, purely
for the purpose of obtaining market approval for the drug, so that it can be sold once the patent
expires, again without prejudicing the legitimate interests of the patent holder. By contrast, the very
ability of a trademark owner to distinguish goods usi ng his trademark is significantly compromised if
that trademark owner cannot stop confusing uses of his signs – that is, if there are signs in the
marketplace that are likely to cause confusion. So , for the same reason that the language "does not
[unreasonably] conflict with the normal exploitati on" of a trademark is not included in Article 17 –
because any conflict with the trademark undermines the trademark right entirely – the standard of

104 The Panel in Canada - Patent Protection of Pharmaceutical Products explained that the term
"normal" as used in Article 30, "can be understood to refer either to an empirical conclusion about what is
common within a relevant community, or to a normative standard of entitlement. The Panel concluded that the
word 'normal' was being used in Article 30 in a sense that combined the two meanings." Panel Report, Canada
- Patent Protection of Pharmaceutical Products, para 7.54.

"unreasonably prejudice" the rights of the owner is not included - because any uses of signs likely to
cause confusion with a mark will prejudice the owner's interests. In order to "take account" of the
trademark owner's legitimate interests in being ab le to use his trademark to distinguish goods,
likelihood of confusion must be avoided to the maximum extent possible, and where likelihood of
confusion is necessary – because of the competing interests concerned – such likelihood of confusion
should be limited to that which is strictly necessary to serve the particular competing interest in the
case.
105

131. Indeed, reinforcing this view of the trademark obligation, in contrast to the obligations with
respect to other intellectual property rights, Ar ticle 21 of the TRIPS Agreement provides that
"compulsory licensing of trademarks shall not be pe rmitted." By contrast, there is no such provision
with respect to copyrights, industrial designs, or patents.

132. With respect to the interests of third parti es, Articles 26.2 and 30 are virtually identical to
Article 17, as all require the exceptions to take "acc ount of the legitimate interests of third parties."
Article 13, by contrast, does not specifically refer to the interests of third parties. Again, this
difference demonstrates the simple proposition that third party interests must specifically be
considered when providing exceptions to trademarks, industrial designs, and patents, but that this is
not an explicitly-stated requirement for copyright exceptions in the TRIPS Agreement.

133. Finally, another difference between the othe r three exceptions is that Article 17 refers
specifically to "fair use of descriptive terms", as an example of the types of permitted limited
exceptions. As the reference to "fair use" is intr oduced by the phrase "such as", this is not the only
permitted limited exception. The fact that Articles 13, 26.2, and 30 do not contain specific examples
of exceptions does not provide any relevant information about how Article 17 should be interpreted.

Q157. The United States alleges that the EC does not provide legal means required under Article 22
of the TRIPS Agreement (see Un ited States first written submission, paras.177-178; US rebuttal,
para. 213). Do you claim that the EC fails to pr ovide a legal means to prevent uses of indications in
accordance with Article 22.2 because of alleged i nadequacies in Regulation (EC) No. 2081/92 alone?
Or do you allege that measures outside the Panel' s terms of reference are also inadequate to fulfil
that obligation? If the latter, on what evidence do you rely? USA

Response:

134. The United States' claim that the EC do es not provide the legal means required under
Article 22 of the TRIPS Agreement is based on inade quacies in the EC GI Regulation. As the United
States has pointed out in its submissions and or al statements, the EC GI Regulation provides the
means for obtaining Community protection of geogra phical indications of agricultural products and
foodstuffs (Article 2(1) of the GI Regulation). An d it fails to provide those means to all interested
parties, as required by Article 22. Further, by providing the vehicle for obtaining Community-wide
protection for geographical indications, and then fa iling to provide rights of objection to interested
parties, it has failed to provide any mechanism at all for interested parties to protect against
misleading uses with respect to a GI that has been registered: once a GI has been registered, those
who might have objected are powerless to prevent misl eading uses with respect to those GIs. The EC
has suggested that other, unspecified, member St ate laws and Community rules make up for these
deficiencies in the GI Regulation, but it has not sustained its burden of refuting the US prima facie
case. To the contrary, the EC declined an invitation from the Panel to provide such information.

105 As noted in the US response to question 155, to be "limited," an exception cannot apply
automatically and in all cases, without an analysis of the particular competing interests at issue.

Q158. The Panel notes the United States' submission that the Panel should find that "the EC GI
Regulation" is inconsistent with Articles 16. 1 and 22.2 of the TRIPS Agreement (US rebuttal,
paras.166 and 217, respectively). However, why woul d it be appropriate to conclude that a single
measure, rather than a Member, fails to comply with each obligation? If the EC or its member States
adopted other measures which complied with Artic les 16.1 and 22.2, could they fill the gaps in the
alleged inconsistencies in Regulation (EC) No. 2081/92? USA

Response:

135. The drafters of the DSU chose to refer to "measures" being inconsistent with the covered
agreements. For example, Article 19.1 of the DSU refers to the situation where "a panel or the
Appellate Body concludes that a measure is inconsistent with a covered agreement."
106 The United
States has followed this convention.

136. The EC may have a number of options to implement DSB recommendations and rulings that
its GI Regulation is inconsistent with the EC 's WTO obligations, and the United States is not
attempting to prejudge what those options are at th is point in the dispute nor which option the EC
should choose.

137. If the Panel's question is directed at current measures that may fill the gaps, in any dispute, of
course, it is theoretically possible that there are ot her measures, of which the complainant is unaware
and which it did not cite, that eliminate or count eract any alleged inconsistency identified by the
complainant. For example, a law cited in a panel request may have been overturned by a later law.
Or, in identifying burdens placed on foreign products in one regulation, the complainant may have
been unaware of another regulation placing the identical burdens on domestic products (although,
ideally, such omissions would have been elucidat ed in consultations). In such a case, once the
complainant has presented a prima facie case that a measure is inconsistent with a WTO obligation, it
is the respondent that then has the burden to rebut that prima facie case by presenting facts and
arguments showing that there is no inconsistency. Such facts and arguments may very well include
other domestic measures, not cited by the comp lainant, that demonstrate that any alleged
inconsistency is eliminated. This would then cons titute the respondent's affirmative defense (it is the
respondent that is in the best position to come fo rward with such information about its own domestic
law). However, if the respondent fails to do this – i.e., if it fails to overcome the prima facie case
presented by the complainant – then the panel must make findings in favor of the complainant.

138. In this dispute, for instance, in response to claims that the GI Re gulation deprives trademark
owners of their Article 16.1 rights, the EC has merely presented excerpts of a few other laws – such as
unfair advertising laws – that they claim "fill in the gap" left by the GI Regulation. Of course, the
United States has explained that, since the standards in those laws are much more stringent than those
in Article 16.1, they in no way provide trademark ow ners with their Article 16.1 rights. But the point
with respect to the Panel's question is that, if there were other measures somewhere in EC legal
system or in those of its member States that co mpensated for the WTO inconsistencies in the GI
Regulation, the EC would have and should have come forward with them. But in fact, if there are any
such measures, the EC failed to present them to the United States during five years of consultations.
And they failed to do so during the entire course of this proceeding. Indeed, at the first Panel
meeting, the United States recalls that the Panel sp ecifically invited the EC to present information to
support its vague allegations that other, unspecified EC and EC member State laws and regulations
might make up for the apparent WTO inconsistencies in the EC GI Regulation. The EC declined to

106 See also for example Articles 3.7 and 21.5.

do so, implying that it was the responsibility of the United States to show that there were no such laws
or regulations.107

139. But the consequences of this a pproach would be to require the complainant to show that (1) a
particular measure is inconsis tent with WTO obligations and
 (2) there is no other measure anywhere
throughout the legal system of the respondent that compensates for this WTO-inconsistent measure.
Such a requirement would be tantamount to requiri ng a complainant to cite in its consultation and
panel requests the entire body of the respondent's la w as the measures at issue. Needless to say,
putting such a burden on the complainant to "prove the negative" is inappropriate and unworkable.

Q159. May protection for designations of origin and geographical indications now be afforded in
the EC only within the framework laid down by Regulation (EC) No. 2081/92? To what extent does
the EC implement its obligations under Article 22.2 of the TRIPS Agreement through Regulation (EC)
No. 2081/92 and to what extent through other measu res (see EC first written submission, paras. 433
and 434)? Are the other measures cited by the EC alone sufficient to fulfil its obligations under
Article 22.2? EC

Q160. To what extent does the EC implement its obligations under Article 22.2 of the TRIPS
Agreement through Regulation (EC) No. 2081/92 and to what extent through other measures? Does
the EC believe that the complainants should prove a negative, i.e. that no legal means required under
Article 22.2 are available? Can a respondent simply argue that other measures, outside the Panel's
terms of reference, fulfil an obligation, without pr oof of how those other measures fulfil that
obligation? EC

Q161. Australia refers to Article10bis(1) of the Paris Convention, "as incorporated by TRIPS
Article 2.1" (Australia's first written submission, para. 75, also para. 268) and also submits that
"Paris Article 10bis.1 deals with the issue of unfair competition, which is not otherwise dealt with in
the TRIPS Agreement except 'in respect of geographica l indications' in TRIPS Article 22.2" (response
to Panel question No. 82). Please clarify wh ether Australia seeks a finding that the alleged
inconsistency with Article 10bis is a violation of Article 2.1 or 22.2 of the TRIPS Agreement or both.
AUS

Q162. How did Australia's reference to Article 24. 5 of the TRIPS Agreement in its request for
establishment of a panel put the EC on notice that Australia challenged Regulation (EC) No. 2081/92
in respect of Article 24.5 in conjunction with Article 4 of the Paris Convention (1967) as incorporated
by Article 2.1 of the TRIPS Agreement? In Austra lia's view, to what exten t could a respondent begin
preparing its defence of this claim without knowing that it was based on the right of priority? AUS

Q163. The Panel takes note of Australia's and the EC's respective views on the applicability of
Article 70.1 of the TRIPS Agreement to individual GI registrations (Australia's response to Panel
question No. 90; EC rebuttal, para. 202). On 31 December 1995, at what stage of the procedure
under the former Article 15 were the GIs later registered under Article 17? Did any individual GIs
registered under Article 6 have an objection period that expired prior to 1 January 1996? EC

107 The United States also reminds the Panel that, co ntrary to the EC's arguments, the United States
does not have the burden of proving that its reading of the GI Regulation is "the only reasonable interpretation"
(EC Second Written Submission, para. 275) or the "only correct one" (EC Oral Statement at the Second Panel
Meeting, para. 5), or that a WTO-consistent interpretation of the regulation is "impossible" (EC Second Written
Submission, para. 274). Nor can the EC simply rely on "considerable deference" to immunize it from claims of
WTO-inconsistency. (EC Second Written Submission, para . 273). Rather, the United States has the burden of
presenting information and arguments that the EC Regulation means what it says sufficient to make a prima
facie case of a WTO-inconsistency. It is then up to th e EC to present information and arguments to rebut that
prima facie case.

Q164. In what way are the objectives and principles set out in Articles 7 and 8 of the TRIPS
Agreement, and the considerations recited in the fi rst paragraph of its preamble, relevant to the
interpretation of the provisions of that agreement at issue in this dispute? USA, AUS, EC

Response:

140. The first paragraph of the preamble, and Articles 7 and 8, of the TRIPS Agreement are
potentially relevant to the extent they provide cont ext for interpreting the provisions offered by the
parties, or to the extent they point to the object and purpose of the TRIPS Ag reement. And, indeed,
the first paragraph to the preamble to the TRIPS Agre ement is instructive, as it reflects the desire of
the Members "to reduce distortions and impediments to international trade" and "to ensure that
measures and procedures to enforce intellectual pr operty rights do not themselves become barriers to
legitimate trade." The United States has alrea dy discussed the relevance of this provision to
interpreting footnote 1 to Article 1.3 of the TR IPS Agreement in response to question 104. In
addition, however, in interpreting the provisions of the TRIPS Agreement th at the United States
argues are breached by the EC GI Regulation, the Panel should be mindful of the object and purpose
of the TRIPS Agreement, as reflected in this pr eamble, as contrasted with the obvious distortions,
impediments, and barriers to international trade introduced by the EC GI Regulation.

141. By contrast, the United States does not believe that Articles 7 and 8 of the TRIPS Agreement
contribute significantly to an understanding of the TRIPS provisions at issue. Likewise, the EC has
also not provided arguments with respect to these provisions.

ANNEX A-9

COMMENTS OF THE UNITED STATES ON THE EUROPEAN COMMUNITIES'
REPLIES TO QUESTIONS POSED BY THE PANEL AND TO QUESTIONS
POSED BY AUSTRALIA FOLLOWING THE SECOND SUBSTANTIVE MEETING

(2 September 2004)

1. The United States is providing comments below on the responses of the European
Commission ("EC") to the second set of questions presented by the Panel and Australia on August 13,
2004. The question numbers used as headings are the questions presented to the EC by the Panel, and
the paragraph numbers, if any, at the beginning of each comment refer to the paragraph number of the
EC response. The United States has incorporated its comments on the EC's responses to the questions
of Australia in the comments on the EC's responses to the questions of the Panel. The United States
has not commented on all responses, nor has it co mmented on all aspects of the responses that are
addressed. Silence should not be construed as agreem ent. With respect to many questions, the EC
responses raise the same points that the EC has ar gued previously and that the United States has
already addressed in the course of this dispute (i ncluding in its own responses to the second set of
Panel questions).

Question 94

2. Two comments are in order. First, the EC again admits in paragraph 1 that the reciprocity and
equivalence requirements in Article 12(1) of the GI Regulation conflict with the EC's obligations
under Article III:4 of the GATT 1994.
1 Since Article 12(1) contains the requirement for equivalent
inspection structures, the United States does not see the basis for the EC's claim that the requirement
for EC-equivalent protection is inconsistent w ith Article III:4 and yet the requirement for EC-
equivalent inspection structures is not.2

3. Second, despite the EC's equivocations, the fact is that the EC claimed in its first submission
– and still claims in its most recent official Guide of one month ago
3– that the obligations of the
TRIPS Agreement rendered the equivalency and reciprocity requirements inapplicable to WTO
Members. Further, in its responses to Panel ques tions, the EC specified that the "without prejudice"
language referred to both the TRIPS Agreement and the GATT 1994.4 And in its second submission,
the EC clarified that the introductory phrase "wit hout prejudice to international agreements" means
that the provisions that follow are inapplicable to the extent they conflict with an international
agreement.5 The EC also specified imme diately afterward in that same submission that the "without
prejudice" language prevents any conflict with th e national treatment obligations of the TRIPS
Agreement and the GATT 1994, by rendering equiva lency and reciprocity requirements inapplicable
to WTO Members. 6 Yet, as the EC has perhaps only recently come to see, the EC's own argument
necessarily means that the reciprocity and equivale nce conditions of the GI Regulation provide less
favorable treatment to non-EC nationals than to EC nationals. This directly contradicts the EC's

1 See EC Second Written Submission, para. 55, in whic h the EC states that when regulatory provisions
are preceded by the "with out prejudice to internationa l agreements" language, this me ans that the international
agreement prevails when there is a "conflict" between the regulatory provision and the international agreement.
2 Article 12(1), foreshadowing the requirements in Article 12a(2), imposes the condition of "inspection
arrangements ... equivalent to those laid down in this Regulation."
3 Exhibit EC-64, page 18
4 EC Responses to First Set of Panel Questions (July 8, 2004), paras. 12-13.

separate argument that the EC GI Regulation h as nothing to do with discrimination against
"nationals". Now that it has become apparent th at the EC's earlier arguments constitute an admission
that the GI Regulation does accord different treatment to non-EC nationals than to EC nationals, the
EC is trying to back away from those earlier argu ments (as it has with respect to its own consistent
interpretation of its Regulation). But the truth is found in the EC's own assessment of its own
Regulation before the ramifications of that assessme nt became apparent: the GI Regulation does, in
fact, accord different, and less favorable, treatme nt to non-EC nationals than it accords to EC
nationals.

Question 95

4. It appears clear from the EC's response that, pr ior to the EC's first written submission in this
dispute, neither the EC nor any EC institution expr essed any view to anyone that the conditions of
reciprocity and equivalence do not apply to WTO Me mbers because those conditions are inconsistent
with the EC's WTO obligations.

Question 96

5. The EC's answer speaks for itself, although th e United States would note that even if the
Commission did consider the "guide" – which is not a measure within this Panel's terms of reference –
to be internally binding, it would not, even in the EC's view, be binding on any EC member States or
other EC institutions, such as, most notably, the European Court of Justice ("ECJ"). Consequently,
this "guide" offers no comfort that the ECJ w ould uphold the Commission's strained and non-textual
interpretation of the GI Regulation.

Question 97

6. The United States confesses that it does not see how any of the quote d documents support the
EC's apparent view that it "confirmed [in TR IPS Council] that there were no conditions of
equivalence or reciprocity."
7 By contrast, the United States and Australia have documented numerous
cases in which, in describing the GI Regulation to WTO Members, the conditions of equivalency and
reciprocity were prominently mentioned, with no disclaimer that these conditions did not apply to the
WTO Members to whom the descriptions were addressed.

7. Further, the Panel should recall that, whatever shades of nuance the EC now seeks to have the
Panel read into general communications to the WTO Members over the years, the EC specifically
confirmed in writing the US understanding that its GIs could not be registered because the United
States did not satisfy the GI Regulation's conditions of equivalence and reciprocity.
8

8. Finally, while the EC communications to other WTO Members in the TRIPS Council do
nothing to dispel the conclusion that the conditi ons of reciprocity and equivalence apply to WTO
Members, they do shed light on the issue of nati onal treatment under the TRIPS Agreement. In the
very excerpt quoted and relied upon by the EC from the official EC responses to questions from India,
the EC itself described the Regulation as making a distinction between producers established in the
EC, on the one hand, and "third country nationals", on the other. The EC was attempting to
characterize the treatment as equal – "to avoid discrimination" – but was not disguising the fact that
the two tracks for GI registration corresponded to nationality:

7 EC Response to Second Set of Panel Questions, para. 15.
8 See US Opening Oral Statement at the Second Panel Meeting, para. 21; Exhibit US-73, unnumbered
p.4: "While it is true that US GIs cannot be registered in the EU . . ." .

In order to obtain the same protection (Article 13 of the Regulation), if it must be complied with by
the producers established in the EC, it must also be complied with by the third country nationals, to
avoid discrimination.9

9. Further, lest there be any doubt as to the EC's view of its own GI Regulation, the EC
specifically stated that providing protection to GIs in respect of products from third countries was
required by the national treatment obligation of the TRIPS Agreement:

Article 12 of Council Regulation 2081/92/EEC provides for the same protection in
respect of products from third countries which meet those requirements. Therefore,
nationals from other WTO Me mbers are afforded treatmen t "no less favorable" than
Community nationals, as required by Article 3 of the TRIPS Agreement.
10
The paragraph that immediately follows makes th e same statements with respect to the MFN
obligation under Article 4 of the TRIPS Agreement. The quoted passages from the EC's response to
New Zealand are in a similar vein.11

Question 100

10. The United States submits that, within a single measure and as between related measures, the
calculated use of different words and phrases would nor mally reflect that a difference in meaning is
intended.

Question 101

11. The United States finds it interesting that, in response to a claim that a measure accords less
favorable treatment to non-EC nationals than to EC nationals – in direct breach of the TRIPS
Agreement and Paris Convention national treatment ob ligations – the EC is asking the Panel simply
not to make "any
 comparison between nationals." The purpo rted ground is that the Regulation does
not contain any discrimination on the basis of nationality.

12. But the TRIPS Agreement requires that non- EC nationals be accorded treatment no less
favorable than that accorded to EC nationals with regard to the protection of intellectual property.
That the EC would now ask the Panel not to even compare
 treatment of EC versus non-EC nationals
in a measure that concerns protection of intellectual property is itself probative of what the EC
believes such a comparison – which is mandated by th e very nature of the obligation – would show.
And, as discussed above, it is contrary to the EC's communications in the TRIPS Council, which
specifically invited such a comparison in the mistaken belief that the discrimination with respect to
non-EC nationals did not amount to less favorable treatment.
12

13. Another reading of the EC's response is that the EC believes that, since the GI Regulation
does not state literally that EC "nationals" are accord ed one treatment and that non-EC "nationals" are
accorded lesser treatment, the measure is per se non-discriminatory, and any further analysis is
therefore unnecessary. As the United States has set forth in detail in its comments on Panel

9 IP/Q2/EEC1, p. 23, cited at EC Response to Second Set of Panel Questions, para. 15 (emphasis
added).
10 Id. Emphasis added.
11 E.g., EC Response to Second Set of Panel Questions, para. 12 ("the procedure followed by
Community producers as outlined ab ove must be followed, in accordan ce with the principle of national
treatment.")
12 See US comment to EC question 97 response.

question 103 below, and its own responses to Pane l question 103, this is simply untrue, and is
contrary to findings of the Appellate Body in, for instance, US Bananas and Canada – Autos.

14. Further, it is simply untrue as a factual matte r that "the only relevant element to which the
Regulation refers is the location of the area to wh ich the geographical indica tion is related." The
Regulation specifically limits the ability to apply to re gister a GI, and thereby to obtain rights in the
GI, to persons
 producing or obtaining the products in the rele vant geographical area. Further, it is the
persons established and producing the products in the re levant area that are the intellectual property
rightholders whose rights are protected by the TRI PS Agreement and the Paris Convention. Finally,
the right of objection is expressed purely in terms of where the person is resident or established, and
where that person is "from", which the EC itself spec ifically characterized in last year's amendments
to the EC GI Regulation as corresponding to the person's nationality.13

15. As the United States notes above in its comment on the response to question 97, the EC itself,
in communications in the TRIPS Council, character ized the requirements of the GI Regulation as
applying to EC producers, on the one hand, and thir d country "nationals" on the other. Further, in
those same communications, the EC itself asserted that, because the GI Regulation provides GI
protection "in respect of products from third countri es which meet [the requirements of Article 12]",
"[t]herefore, nationals from other WTO Members are afforded treatment 'no less favourable' than
Community nationals, as required by Article 3 of the TRIPS Agreement."

Question 103

16. In response to the Panel's question concerni ng considerations rele vant to the Panel's
assessment of de facto discrimination, the EC takes two tacks. The first is to draw various distinctions
between the national treatment obligation in the GATT 1994 and the national treatment obligation in
the TRIPS Agreement and the Paris Convention. This is apparently an attempt to create as much
distance as possible between this dispute and the considerable body of pa nel and Appellate Body
findings in the goods context that would lead the Panel to find a breach of national treatment with
respect to intellectual property rights in this disp ute. But while there ar e certainly distinctions
between the national treatment obligation under Ar ticle III of the GATT and the national treatment
obligation under Article 3 of the TRIPS Agreemen t and Article 2 of the Paris Convention, the
Appellate Body itself stated in US – Section 211 that the national treatment obligation is a
fundamental principle underlying the TRIPS Agreem ent, just as it was in what is now the GATT
1994.
14 The Appellate Body noted further that the la nguage of Article 3.1 of the TRIPS Agreement is
similar to that of Article III:4 of the GATT 1994, a nd stated that "the jurisprudence on Article III:4
may be useful in interpreting the national tr eatment obligation in the TRIPS Agreement." 15 Indeed,
one object and purpose of the TRIPS Agreement is to establish new rules and disciplines "concerning
the applicability of the basic principles of GATT 1994." 16 As the Appellate Body itself has noted,
national treatment is one of these principles.17

17. The United States also notes that the EC itself supported this view in the dispute US – Section
211. Before the Appellate Body, the EC argued breaches of national treatment under the TRIPS
Agreement by pointing to findings in a dispute involving the national treatment obligation with

13 See US Opening Oral Statement at Second Panel Meeting , para. 9; Council Regulation (EC)
693/2003 of 8 April 2003, p. 2. Exhibit Comp-1h.
14 Appellate Body Report, US – Section 211, para. 242.
15 Appellate Body Report, US – Section 211, para. 242.
16 Second paragraph, preamble, TRIPS Agreement.
17 Appellate Body Report, US – Section 211, para. 242.

respect to goods under Article III:4, US – Section 337.18 Further, at the panel stage of that dispute, the
EC argued that:

the language of Article 3.1 of the TRIPS Agreement on "National treatment" is based
on Article III(4) of the General Agreem ent on Tariffs and Trade ("GATT").
However, while national treatment in GATT attaches to goods - not to the respective
owners of the goods - it attaches under TRIPS to the person of the right holder. This
modified "attachment" is systematically linked to the territorial character of
intellectual property rights . In the EC view, the vast jurisprudence on Article III(4)
of GATT, under the GATT dispute settlement system as well as under the WTO
dispute settlement system, may give val uable insight for the interpretation of
Article 3.1 of the TRIPS Agreement . In any event, the basic feature contained in
Article 3.1 of the TRIPS Agreement woul d appear to be straight forward. A WTO
Member cannot treat a national of another WTO Member in relation to an
intellectual property right which its IPR system offers less favourably than it treats its
own nationals in relation to such an intellectual property right.
19
18. Further, the EC states at paragraph 27 that "so far, Article 3.1 of the TRIPS Agreement has
never been applied on a de facto basis." What the EC apparently means is that no TRIPS dispute thus
far has involved de facto discrimination. This is true, since th is is only the third dispute in which a
breach of national treatment under TRIPS has been alleged, and only the second in which it is a
significant issue. What the EC seems to imply, however, is that there should be no de facto analysis,
and that national treatment in the goods ar ea is not instructive with respect to any de facto analysis in
the TRIPS context.

19. But this implication is wrong, and is cont rary to the Appellate Body's instruction in US –
Section 211 that such findings may well be useful. Incidentally, in a dispute involving a breach of
most favored nation treatment obligations under the General Agreement on Trade in Services
("GATS") – which, like the TRIPS Agreement, contains national treatment and MFN obligations
based on treatment of persons instead of goods – the Appellate Body specifically looked for guidance
to MFN findings in the goods area.
20 Citing European Economic Community - Imports of Beef from
Canada,21 in which the panel found de facto discrimination, the Appellate Body found that the MFN
obligation with respect to treatment accorded certain persons under the GATS Agreement "should be
interpreted to include de facto, as well as de jure, discrimination."22 Also relevant in this context, the
Appellate Body interpreted the "per son-based" MFN obligation as including de facto discrimination
in part because the language did not exclude such an interpretation, stating that

The obligation imposed by Article II [the MFN obligation] is unqualified. The
ordinary meaning of this provision does not exclude de facto discrimination.
Moreover, if Article II was not applicable to de facto discrimination, it would not be
difficult -- and, indeed, it would be a good deal easier in the case of trade in services,
than in the case of trade in goods -- to devise discriminatory measures aimed at
circumventing the basic purpose of that Article.23

18 See Appellate Body Report, US – Section 211, para. 48.
19 Panel Report, US – Section 211, para. 4.108 (emphasis added).
20 Appellate Body Report, EC – Bananas, paras. 232 - 233.
21 Adopted 10 March 1981, BISD 28S/92, paras. 4.2-4.3.
22 EC – Bananas, para. 233.
23 Id., para. 233. See also Appellate Body Report, Canada – Autos, in which the Appellate Body, citing
its findings in EC – Bananas, reversed the panel and found that, despite the lack of express language, whether
subsidies were contingent on the use of domestic over foreign goods should be determined on a de facto, and not

20. In analyzing the national treatment obliga tion under the TRIPS Agreement, the Appellate
Body specifically endorsed an approach that asked wh ether there is differential treatment of nationals
and whether that treatment "could be considered to provide a less favourable treatment to nationals of
other Members as it denies effective equality of opportunities " to those nationals.
24 I t i s t h e r e f o r e
relevant for this Panel to ask, for instance, whethe r the EC GI Regulation, with respect to French
nationals claiming GI rights in a French cheese and US nationals claiming GI rights in a US cheese, is
denying "effective equality of opportunities" to those US nationals. In this context, the EC's argument
that the TRIPS Agreement national treatment obliga tion would always require that the treatment of
pharmaceutical patent holders be compared to the tr eatment of motor vehicle part patent holders is
irrelevant for purposes of this dispute.

21. Finally, it is untrue that the complainants have focused in this dispute purely on
discrimination based on the origin of the goods , and not on discrimination between nationals.
25 The
United States will not reiterate all of its arguments here, but only notes that there is a strong link
between the nationality of the person able to apply for GI registration/protection, and whether that
person can take advantage of the "domestic track" for registration or is relegated to the "foreign"track
for registration under the GI Regulation. The EC has also confirmed in the TRIPS Council that what
it believes to be equal treatment with respect to producers of non-EC based GI is required by the
national treatment obligation of the TRIPS Agreement.
26

22. The EC's second tack in responding to the Panel's question concerning de facto discrimination
is to conjure a false "conflict" between the obligations under the GATT Article III and TRIPS
Agreement Article 3.1. As the United States has already noted, however, there is nothing unusual
about a measure being covered by two different sets of obligations, and there is nothing about this
situation that requires anything other than the norma l approach to the interpretation of the agreement
provisions. More particularly, there is nothing in this situation that presents any kind of "conflict."
Certainly, nothing in this situation would support na rrowing the obligations in one or the other of the
agreements at issue. Further, the United States reiterates that the lack of a general Article XX
exception in the TRIPS Agreement – but the specific inclusion of particular exceptions in Article 3.2,
based on the Paris Convention and on language simi lar to Article XX(d) – can only be regarded as
deliberate.

Questions 104-105

23. The United States refers to its response to Pa nel's question 104, concerning the interpretation
of "separate customs territory Member of the WTO", and offers only the following comments on the
EC's response. First, there is nothing in the word "separate" that suggests that the term "customs
territory Member of the WTO" (which "separate" modifies), can only mean a subpart of a country.
The word "separate" can, and in context does, just as equally mean separate from other WTO
Members (i.e., the EC as a WTO Member "separate" from its EC member States, who are also WTO
Members), and "separate" in the sense of "separate" from "country" Me mbers of the WTO. There is
no question that the EC's customs terri tory is "separate" from that of France, or Italy, or any of the
other 23 member States – it is a distinct customs terr itory that is separate from that of the countries
that make up the EC. Indeed, it would be odd to think that a customs union was not intended to create
a customs territory separate from that of its constituent Members. Indeed it is clear from

just de jure, basis. It is also interesting to note that in that dispute, the EC was arguing in favor of a de facto
analysis of the MFN obligations in the GATS. Appellate Body Report, Canada – Autos, para. 175.
24 Appellate Body Report, US – Section 211, para. 258 (emphasis added).
25 EC's Response to Second Set of Panel Questions, para. 32.
26 EC Response to Second Set of Panel Questions, para. 15; See US comment above on EC response to
question 97, above.

Article XXIV:8(a) of the GATT 1994 that a custom s union creates a "separate" customs territory
since it defines a customs union as the "substitution of a single customs territory for two or more
customs territories." The single customs territory is "separate" and distinct from the two or more
customs territories for which it substitutes.

24. Second, although the EC Treaty has a concep t of EC "citizenship" as applied to natural
persons, it does not confer any nationality itself, and does not contain any concept of "nationality" as
applied to legal persons. Further, what the EC it self may consider to be "nationals" and what are
considered "nationals" under the WIPO administer ed treaties listed in Article 1.3 of the TRIPS
Agreement – which apply only to countries, and not to entities like the EC – are two different things.

Question 106

25. The United States has presented to the Pa nel substantial information and argument
demonstrating that, particularly in the area of agricultural products and foodstuffs, it is EC nationals
that claim rights in EC-based GIs, and non-EC nationals that claim rights in non-EC-based GIs.
Consequently, a regulation that discriminates based on where a person is established producing GI
products discriminates based on nationality.
27 Four months after the United States submitted its first
submission to this effect, on April 23, 2004, the EC has not been able to present a single example of a
non-EC national claiming rights in an EC-based GI (i.e., quadrant 2 of China Taipei's model in the US
response to Panel question 101). This is in spite of the fact that it is the EC, and not the United States,
that has the best access to th e relevant information and the re levant private and public sector
stakeholders who would know. If there were such pe rsons, the EC would certainly have informed the
Panel and the complainants.

26. In other words, not only are there no
 non-EC-based GIs registered under the EC GI
Regulation – compared to over 600 EC-based GIs – but there is also no indication whatsoever that any
non-EC national has been able to become a rightholde r in any EC-based registered GI. Effectively,
non-EC GI rightholders have simply been shut out by the requirements of the EC GI Regulation.28

27. Further, the EC appears to concede, at pa ragraph 51, that there is no further information
available that would shed any additional light on th is question. Therefore the information presented
to the Panel demonstrates that the EC GI Regul ation distinguishes based on nationality and accords
less favorable treatment to non-EC nationals than it accords to EC nationals.

28. As a final point, the EC claims "at the outset" that the Panel is wrong to focus on the
nationality of the GI "applicant", since, according to the EC, the "conditions for applicants are a
procedural modality of the application process" and the applicant is not identical with the rightholder.
This is wrong. Under the GI Regulation, the app licant is a group or a natural or legal person that
applies to register the agricultural products or foodstuffs " which it produces or obtains ". Article 5(2)
of the GI Regulation. It is clear that the applican t is the GI rightholder for that product. It is thus
perfectly appropriate to inquire into the nationality of that person, as the Panel has done.

27 The United States has also argued that it is not critical to a finding of a breach of national treatment
under the TRIPS Agreement that the Panel find , as a matter of fact that there are no non-EC nationals claiming
rights to EC-based GIs, or EC nationa ls claiming rights to non-EC GIs. See US Response to Panel Questions
101-103.
28 Although the EC cites two examples of one EC member State national owning companies in another
EC member State, there is no in dication that, even in those cases, the producing companies were not
incorporated in the EC member State in which they are established.

Question 107

29. The EC again appears to claim that, simply because the GI Regulati on does not use the word
"national" (which is the only reasonable way to understand the EC's conclusory mantra that the
Regulation "does not involve any discrimination on the basis of nationality"), it cannot breach
national treatment obligations. The EC behaves as if the legal and practical requirement that a legal
person become a "national" in order to establish itself in the EC producing agricultural products and
foodstuffs is a mere accident or coincidence, and thus irrelevant. But practical and legal
considerations – primarily on the face of the GI Regul ation, but also in conjunction with other legal
and practical factors – mean that EC nationals can have their GIs registered and protected under the
GI Regulation, while non-EC nationals cannot. Su ch a situation spells out a breach of national
treatment under the TRIPS Agreement and the Paris Convention.

Question 112

30. For the reasons submitted in its response to this question, there is a requirement under the GI
Regulation to recognize any country that satisfies the conditions in Article 12(1) of the GI Regulation,
contrary to the EC's response.

Question 114

31. Paragraph 68. The United States notes that, contrary to the implications of the EC,
Article 12a(2)(a) requires the WTO Member to dete rmine whether a GI application satisfies the
requirements of the GI Regulation, not of the TR IPS Agreement; this is not a determination of
whether the GI falls under the definition of a GI under Article 22.1 of the TRIPS Agreement. There
are obvious differences between the definition of a GI in the GI Regulation and the definition in the
TRIPS Agreement, and the GI Regulation imposes a host of requirements that have no relation to the
TRIPS Agreement definition of a GI.
29

32. Paragraph 69. In this response, the EC confirms th e US argument in response to the Panel's
question 128, that the EC is not simply allowi ng other WTO Members to determine whether the GI
Regulation requirements, including inspection structur es, are satisfied. Rather, having required other
WTO Members to establish inspection structures and to determine whether the GI Regulation's
requirements are met, the EC unilaterally reserves to itself the overriding power to decide whether the
WTO Member's determination is right or wrong.

Question 115

33. The EC confirms that, for purposes of objec tions under the Regulation, the person that is
"from a WTO Member country" is th e same as the person who is "resident or established in the WTO
Member country." In turn, this is the same person th at the EC itself describes as the "national" of the
WTO Member who had to be granted the right to object in order to comply with the TRIPS
Agreement.
30 The United States does not see how the EC can maintain that the person resident or
established in a WTO Member is considered a "national" of that Member for purposes of objections,
but that the same person established and produci ng a product in that same WTO Member is not a
"national" of that WTO Member when it comes to submitting applications for GI protection.

29 E.g., Articles 2(3)-2(6), 3(2), 4, 5(1), and 10, to name but a few GI Regulation requirements that are
not related to the TRIPS definition of a GI.
30 See US Opening Oral Statement at Second Panel Meeting, para. 9; Council Regulation (EC)
693/2003 of 8 April 2003, p. 2. Exhibit Comp-1h.

Particularly since the EC maintained the exact opposite – that such a person is a national of that WTO
Member – when trying to justify the TRIPS-consistency of the GI Regulation in TRIPS Council.31

Question 116

34. The United States notes the EC's indifference to whether other WTO Members have the legal
competence to determine whether the requirements of the EC's GI Regulation are satisfied, and
reiterates its view that it is not clear on what basis other WTO Members can deem or not deem that
the requirements of other WTO Members' laws are met. This is a separate question from whether it is
necessary that the WTO Member itself, rather than th e rightholder, demonstrate that a GI is protected
in the country of origin.
32 The United States also reiterates that , contrary to the assertions of the EC,
what the GI Regulation requires is not a determination of whether a GI applicant meets the TRIPS
Agreement definition of a GI; rather, Article 12a(2 ) of the GI Regulation requires on its face that the
WTO Member determine that all of the GI Regulation's requirements are met.

35. Finally, the United States notes that the EC here, and not for the first or last time
33 in this
proceeding, mischaracterizes th e United States as having acknowledged that what the EC
characterizes as the "transmission" of GI applications and objections are "purely ministerial": they are
not, as even the EC acknowledges in its responses to the Panel's questions. 34 In the passage that the
EC incorrectly and repeatedly seizes upon, th e United States was responding to a specific
hypothetical Panel question that "from a practical point of view ... it would probably not be difficult to
designate an office in the US government to perform a purely ministerial act of transmitting
registration applications and objections to the EC." 35 But, as the United States made plain in the
following paragraph of the same response, what the GI Regulation requires is far from a "purely
ministerial act". Therefore, the EC errs in cl aiming that the United States regards the EC GI
Regulation's requirements as a purely ministerial act.

36. Paragraph 77. As discussed below in the US comme nts with respect to questions 135 and
136, the EC has provided no convincing reas on why the EC cannot itself assess whether the
requirements of the EC GI Regulation have been met, on the basis of information provided by the
rightholder.

37. Paragraphs 78-80. The United States submits that unilaterally forcing other WTO Members
to establish particular inspection structures and to determine whether a GI application meets the
requirements of the EC GI Regulation is, in no sense of the word, "cooperation".

Question 120

38. If the EC is correct that current country of origin marking requirements satisfy the
requirements of Article 12(2) of the GI Regulation, then it is not clear what Article 12(2) adds or why
a specific provision burdening non-EC GI products is necessary.

31 See US comment to EC response to Panel question 97, above.
32 See US comment to EC response to Panel Question 136, infra.
33 This mischaracterization is repeated a number of times in the EC's responses.
34 E.g., paragraph 139 of the EC Response to the Second Set of Panel Questions, in which the EC says
that "by transmitting the application, the government of the country of origin certifies that it deems the
requirements of Article 12a(2) [which, inter alia, requires a determination that all the requirements of the GI
Regulation have been met] to be fulfilled."
35 US Response to First Set of Panel Questions, para. 74 (emphasis added).

Question 126

39. Paragraph 103. The United States submits that the distinctions drawn by the EC with respect
to when "third countries" includes WTO Members a nd when it does not are not supported by the very
text of the Regulation itself.

Question 127

40. The United States notes that this response emphasizes the burden being placed on other WTO
Members with respect to the establishment of partic ular inspection structures, without any indication
of why it is necessary that the WTO Member itself establish such structures, as the Panel's question
asks.

Question 131

41. The Panel asks a direct question: whether an y EC Directives "require foreign involvement in
the designation/approval of conformity assessment b odies, when mutual acceptance agreements in the
conformity assessment area do not already exist." In response, the EC discusses and provides
examples of cases in which importing countries have agreed to allow conformity assessment bodies in
the territory of another WTO Member to assess conf ormity with the importing country's regulations.
But the EC fails to address the Panel's question, because the approach taken by the GI Regulation is
apparently unprecedented as well as WTO-inconsistent. The United States submits that there is a
substantial difference between an importing WTO Member allowing
 another WTO Member, as an
option, to designate conformity assessment bodies on its own territory to assess conformity with
regulations of the importing country (or a mutual agreement to that eff ect), and a WTO Member
unilaterally requiring other WTO Members to establish partic ular inspection structures as a condition
of meeting the importing country's regulatory requirements.

Questions 135 and 136 [EC's Article XX(d) Affirmative Defense]

42. A few initial comments are appropriate with resp ect to the Article XX(d) issue. Apparently
for tactical reasons, the EC decided to present virtually no information or arguments with respect to its
GATT 1994 Article XX(d) affirmative defense until its second submission on July 22, 2004. This
meant that the United States' first opportunity to r espond to the EC's Article XX(d) arguments was in
its oral statement at the second Panel meeting. In that oral statement, the United States presented a
full response to the EC's arguments, demonstrating th at the EC had failed even to argue most of the
elements required by Article XX(d): 36 the EC did not argue that the measures at issues were "to
secure compliance" with laws or regulations (ins tead arguing generally only their relation to the
"objectives" of the EC GI Regulation and to its "i mplementation"), and did not identify the "laws or
regulations" with which the meas ures were supposedly designed to secure compliance that were
consistent with the GATT 1994. Further, the Unite d States demonstrated that the GATT-inconsistent
measures were not "necessary" in any sense, showing that there are other measures reasonably
available to the EC (indeed, showing that the EC itself had identified such measures in attempting to
show that its GATT-inconsistent measures had some parallels with other measures used by the EC,
the United States and other WTO Members).

43. Finally, in response to the EC's unsupported single-sentence assertion that its GATT 1994-
inconsistent measures met the requirements in the chapeau to Article XX(d), the United States argued
that these measures are applied in a manner which c onstitutes a means of arbitrary or unjustifiable
discrimination between countries where the same c onditions prevail or a disguised restriction on
trade. As the United States explained, the require ments of the GI Regulation mean that any country

36 US Opening Oral Statement at Second Panel Meeting, paras. 51-61.

that protects GIs in the same manner as the EC – with EC-style inspection structures and with legal
mechanisms for assessing whether the requirements of the GI Regulation are satisfied – may obtain
registration and protection of its GIs. Those WT O Members that do not have such systems cannot
obtain such protection. These are countries where the same conditions prevail, but, because the EC
favors countries that protect GIs the way it does, the EC arbitrarily and unjustifiably discriminates
between them.

44. The Panel's questions 135 and 136 are designed to extract from the EC the arguments and
information that it should have presented, but faile d to present, as its affirmative defense. As
discussed further below, the EC continues to fail to show that it qualifies for the Article XX(d)
exception with respect to the issues ra ised by the Panel. But to the ex tent that open questions remain
with respect any of these issues, the United States su bmits that the Panel should be cognizant that it
was the EC's burden to present convincing informa tion and arguments that its WTO-inconsistent
measures are nonetheless justified by an Article XX (d) exception. There may be many unanswered
questions and incomplete arguments in the EC's res ponses to the Panel's questions, and the cost of not
making the Article XX(d) arguments clear at this stage must, in the US view, be borne by the EC.

45. Further, the United States notes that the EC has presented no information or argument
whatsoever – not in any closing oral statement at the second Panel meeting, and not even in response
to the Panel's questions – to rebut the US argu ments that its GATT-inconsistent measures do not
satisfy the requirements of the chapeau to Article XX(d) – that is, that they are applied in a manner
that which would constitute a means of arbitrary or unjustifiable discrimination between countries
where the same conditions prevail or a disguised rest riction on trade. Since the EC has failed even to
attempt to rebut these arguments, and keeping in mi nd the Appellate Body's in struction that panels
may not make a case for a party,
37 the United States requests that the Panel find that the EC has failed
to show that its GATT-inconsistent measure satisfies the requirements of Article XX(d).

Question 135 [Article XX(d)'s requirement that the measure be a "measure to secure compliance with
laws or regulations which are not inconsistent with the provisions of [the GATT 1994]."]

46. Paragraph 122. The relevant "measures" for whic h the Panel should assess compliance with
Article XX(d) are the requirements of the GI Regulation that the United States alleges are inconsistent
with the GATT 1994. These include the reciproc ity and equivalence requirements of the GI
Regulation, as well as the requirements that WTO Members assess compliance of GI applications
with the EC GI Regulation and certify certain info rmation to the EC concerning the application and
concerning the WTO Member's GI protection system, and that the WTO Members satisfy various EC
requirements related to inspection structures. These heavy burdens placed on WTO Members, which
have been set out in detail in the US submissions, or al statements, and responses to questions in this
dispute, are not simply "verification" and "transmission" of GI applications, as suggested by the EC.

47. Paragraph 125. The EC states that the function of the inspection structures is to secure
compliance with the requirement in Article 4(1) of the GI Regulation that products bearing a protected
name comply with a "product specification" (and th e similar requirement in Article 8 of the GI
Regulation). But the contents of the "product spec ification" are listed in Article 4(2) of the GI
Regulation, and it is not clear how the requirement for specific "inspection structures" relate to
securing compliance with those specifications. Sp ecifically, and considering each of the "product
specifications" in Article 4(2) of the GI Regulati on, the requirement for inspection structures does not
appear to have any relation to securing compliance with

37 See Appellate Body Report, Japan - Measures Affecting Agricultural Products ("Japan - Agricultural
Products"), WT/DS76/AB/R, adopted 19 March 1999, para. 129 (stating that it is the complainant's burden to
make a prima facie case, and that a panel is not entitled to "make the case for the complaining party.")

 (a) the name of the product – which would appear to simply be a fact allowing the
product to be registered

 (b) a description of the physical characteristics of the product – which should be
verifiable from an examination of the product itself upon importation: either the
product has the characteristics or it does not (and, in any case, those characteristics
would not be more readily verified through on-site inspections than through other
means)

 (c) definition of the geographic area – which is just a definition and not susceptible to
"inspection"

 (d) evidence that the product originates in the ar ea – either there is or is not evidence that
the product originates in an area; the evid ence can be evaluated upon application, and
inspection structures could not be consider ed to "secure compliance" with such
evidence

 (e) description of method of obtaining the product – to the extent this is relevant for
particular names, it would seem that this factor would be reflected in the product
itself, considering that the Article 2(2) de finition concerns "quality or characteristics"
of the product.

 (f) link between geography and the product – again, there either is or is not a link
between the two: inspection structures will not "secure compliance" with such a link

 (g) details of inspection structures – it is non-sensical to require inspection structures to
secure compliance with inspection structures

 (h) specific labeling details – like the "name" , this simply reveals how the product will be
labeled; inspection structures will not secure compliance with these details

 (i) any other requirements – it is not clear how inspection structures would secure
compliance with these unspecified requirements

48. In sum, contrary to the EC's arguments, th ere appears to be little or no relationship between
the "product specifications" in Article 4(2) and th e "inspection structures" that the EC claims are
designed to "secure compliance" with those speci fications. Indeed, with respect to several
"specifications" it is not even clear what "securing co mpliance" means. To the extent the concept of
"securing compliance" is relevant at all with respect to the Article 4(2) "specifications" – for instance,
how does one secure compliance with a "name" or a "geographic area" – the inspection structures do
not appear at all suited to securing any such complia nce. The United States submits that the EC has
not sustained any burden of showing that th e requirement for inspection structures "secures
compliance" with the specifications.

49. Further, although the EC argues that the in spection structure requirement is to "secure"
compliance with the "product specifications", it does not show how the "product specifications"
constitute "laws or regulations which are not inc onsistent" with the GATT 1994, which Article XX(d)
requires. For instance, the "product specifications" include details of required inspection structures,
which the United States has shown is GATT-inconsistent.

50. Paragraph 126. The EC states that "verification (and incidentally also the transmission)" of
the application by the country of origin serve th e purpose of establishing whether the requirements of

the GI Regulation are satisfied. But regardless of whether this is the purpose, having the WTO
Member assess whether an application meets the EC GI Regulation's requirements, and requiring the
WTO Member to transmit the application to the EC, along with other documents and declarations
required under Article 12a(2) of the GI Regula tion, do not "secure compliance" with the GI
Regulation. At best, such requirements solicit the WTO Member's view as to whether, in the case of a
particular applicant, an applicant meets the sta ndards set in the EC GI Regulation and require the
communication of that view to the EC (however irrelevant, since it is the EC, and not the WTO
Member, that makes the determination as to whether a GI will be registered). Whether or not a
particular product satisfies the legal requirements of the EC GI Regulation – and therefor may be
registered and protected in the EC – is a legal judgement based on the facts presented as applied to the
legal provisions of the GI Regulation. It has nothi ng to do with whether a product or the applicant is
"complying" with the Regulation. So, neither asp ect of this measure – neither the so-called
"verification" (actually an assessment of wh ether the Regulation's requirements are met under
Article 12a(2)), nor "incidentally also the tran smission" – have anything to do with "securing
compliance", as required by GATT Article XX(d).

51. Paragraph 127 . The EC claims that the requirement that foreign GIs be burdened with a
country of origin label "secures compliance" with the requirement that foreign GIs may only be
granted with due regard for local and traditional usag e and the practical risks of confusion. The EC
also claims that this requirement secures comp liance with the requirement that only qualifying
products may use a "GI" label. With respect to th e first point, it is, in part, the very fact that foreign
GIs, and not domestic GIs, have to bear the burden of removing risks of confusion that give rise to the
WTO breach in the first place. This labeling re quirement is not, therefore, in any sense securing
compliance with a WTO-consistent regulation. To the contrary, it is making the discriminatory nature
of the requirement more concrete. As to the sec ond point, the United States fails to see any relation
between this country of origin labeling requirement and the requirement that a product comply with
the Regulation in order to bear a protected GI. Further, this requirement does not satisfy the
requirement in the chapeau to GATT Article XX(d) that the GATT-inconsistent measure not be
"applied in a manner which would constitute a mean s of arbitrary or unjustifiable discrimination
between countries where the same conditions prevail, or a disguised restriction on international trade."
EC member States, as well as other WTO Members, are all equally situated with respect to making
sure that the consumer is able to distinguish be tween GI products. Therefore it is arbitrary and
unjustifiable to require that only non-EC GIs bear th e burden bearing the distinctive country of origin
label.

52. Paragraphs 128-129. While the EC is correct that Article XX(d) refers to measures to secure
compliance, and not "enforcement mechanisms" per se , it is plain that the WTO-inconsistent
requirements of the EC GI Regulation are neither "enforcement mechanisms" nor measures "to secure
compliance". Rather they appear to be part of a process intended to assess whether applications from
non-EC GI holders should be accepted – a process that creates enormous burdens for foreign GIs –
that is not justified under Article XX(d).

53. Paragraph 130. The EC's argument is circular. The EC claims that the GI Regulation itself
is the WTO-consistent regulation with which th e WTO-inconsistent requirements noted above are
designed to secure compliance. But the EC GI Regulation itself is not consistent with the WTO – that
is what this dispute is about. Therefore, despite the Panel's direct question, it is still unclear as to what
WTO-consistent "laws or regulations" the WTO-inc onsistent requirements of the EC GI Regulation
are supposed to ensure compliance.

Question 136 [Whether the measures are "necessary" to ensure compliance].

54. Paragraph 131.
 The EC has referred to its require ments under Article 12a(2) – that other
WTO Members assess whether applications from their nationals meet the requirements of the EC GI

Regulation, provide a description of the legal basis for protection of the GI in the country of origin,
file a declaration that the EC-mandated inspecti on structures are established on their territory, and
submit all other relevant documents – simply as "verification", presumably to minimize the
appearance of the extent of the responsibility be ing placed on other WTO Members by the EC. But
EC reacts with some alarm at the Panel's suggestion that what is at stake is simple "verification" that
the GI at issue is protected in its country of origin . Therefore, the EC responds to the Panel's question
by attempting to justify broader Article 12a(2) requirements, not just those related to whether the GI is
protected in its country of origin.

55. But none of the EC's responses show that th e requirements of Article 12a(2) are "necessary"
in any sense. The EC says that assessment of whethe r the application complies with the requirements
of the EC GI Regulation – that is, not
 only the requirement that it be protected in the country of
origin, but the substantive requirements, concerning, e.g., whether the product possesses the required
characteristics – requires local knowledge, which "typically" only the country of origin will have. It is
not clear whether knowledge of local conditions is necessary, but even if it is, the EC itself only
believes that the country of origin will "typically" have such information. The GI Regulation leaves
no option for countries that do not have such informati on. The EC's own justification is thus a virtual
admission that the WTO Member itself will not necessarily have more or better information than other
parties (for instance the rightholder). Further, th e EC claims that on-site checks "may also" be
required, which the EC could not carry out without consent of the country of origin. But this answer
suggests that such on-site inspections are not necessa ry under the GI Regulation. If so, it is unclear
what remains of the EC's argument that the invo lvement of the WTO Member is "necessary" on the
basis of on-site inspections that themselves are not necessary. Further, whether the WTO Member
consents or not to the EC's on-site checks is not at issue: the GI Regulation does not anticipate or even
permit such an option. If it did, this would be a nother matter. Consequently, there is no basis for
finding that the Article 12a(2) requirements are in any sense "necessary".

56. The United States notes in this connection that , even in the case of measures to protect human
or animal life or health falling within the scope of the Agreement on the Application of Sanitary and
Phytosanitary Measures ("SPS Agreement"), the SPS Agreement states that where such a measure
"specifies control at the level of production, the Member in whose territory the production takes place
shall provide the necessary assistance to facilitate such control and the work of the controlling
authorities."

57. Paragraph 133 . In essence, the Panel asks why the GI Regulation cannot provide an
opportunity to the rightholder itself to show that his GI is protected in the country of origin. The EC's
non-response is that it does not appear that a US rightholder would be able to present an
"authenticated certificate of registration." But th is response is irrelevant , and demonstrates a bias
against non-EC systems of GI protection. There is no reason that the GI Regulation could not permit
other, equally valid methods for the rightholder to es tablish that his GI is protected in the country of
origin. The assumed absence of a particular docum ent is no excuse to deny to the rightholder the
opportunity to prove entitlement to registration and protection in other ways (ways that WTO
Members other than the EC currently use to effectively protect GIs).

58. Paragraphs 135 - 138. Referring to Article 24.9 of the TRIPS Agreement – allowing WTO
Members not to protect GIs that are not protected in their country of origin – the EC claims that
absence of an EC-style specific GI registration system in other WTO Members makes it "particularly
necessary" that the relevant WTO Member "verify" th e GI application, in particular showing that the
GI is protected in the country of origin. But, to the contrary, it is the widespread existence of those
non-registration systems among the WTO Membership that makes it important to impose this
requirement on the rightholder, not the WTO Member itself. In the absence of a central registration
system, it is the rightholder, not the government, that will be in the best position to provide the legal
provisions and the usage on the basis of which his GI is protected in the country of origin. For

instance, it is the rightholder, not the government, who will know whether there has been a judicial
decision upholding protection of his GI. It is the rightholder, not the government, who can provide
information on the usage of his GI in the country of origin.

59. The United States suggests that the Panel be pa rticularly wary of this line of reasoning from
the EC, as it amounts to a "back-door" method of impos ing the EC's system of GI protection on other
WTO Members as a condition of providing GI prot ection. As the United States has explained
elsewhere, the TRIPS Agreement specifically provi des leeway to WTO Members in implementing
their obligations. Article 1.1 states that "Members shall be free to determin e the appropriate method
of implementing the provisions of this Agreement within their own legal system and practice." The
need for this freedom is particularly obvious in the area of GIs, where there is a broad variety of
methods of providing protection.
38 Yet, the EC GI Regulation, by requiring the WTO Member,
instead of the rightholder, to show that the GI is protected in the country of origin, essentially requires
WTO Members to adopt a centralized system similar to the registration system adopted by the EC,
nullifying Article 1.1 of the TRIPS Agreement unilate rally. Members that do not have an EC-style
system – but that protect GIs through, for instance, unfair trade statutes or common law certification
mark systems – are not in as good a position as the rightholder to demonstrate that the GI is protected,
and yet are penalized under the EC GI Regulation. Indeed, the EC itself recognizes that it is
penalizing systems for GI protection that are different from the EC system, when it admits, at
paragraph 135, that persons with GIs from WTO Members that do not protect GIs through an EC-like
GI-specific registration system may find it more difficult to meet the EC's requirements.

60. The Panel should also consider the full conse quences of the EC's argument. The EC claims
that, in addition to the registration system for GI s, it also protects GIs through unfair trade laws and
laws against deceptive advertising. The United Stat es wonders whether the EC would be satisfied if
the United States refused to allow EC nationals to file applications for GI certification marks for
certain names or to use unfair trade laws with re spect to those names unless the EC could show that
those specific names were registered as GIs in Europe. Yet that is exactly what the EC is requiring of
other WTO Members in the GI Regulation.

61. Paragraphs 139-141. The EC has no real response to the question of why it is necessary for
the WTO Member, instead of the rightholder, to "trans mit" the GI application, other than to claim,
incorrectly, that the United States ad mits that this would be a "purely ministerial act" and that "it
would not appear to have a significant impact on imports". But, as the United States made perfectly
plain in the very response that the EC repeatedly and incorrectly cites,
39 what the EC GI Regulation
requires is not a purely ministerial act of transmission: to the contrary, the EC GI Regulation imposes
substantial requirements on WTO Members with re spect to GI applications of its nationals. 40 Further,
the EC even admits, in paragraph 139 of its r esponse, that "by transmitting the application, the
government of the country of origin certifies that it deems the requirements of Article 12a(2) [which,
inter alia, requires a determination that all the requirements of the GI Regulation have been met] to be
fulfilled." What the EC has failed to answer is the key question asked by the Panel: why is it
necessary for the WTO Member, instead of the rightholder to submit the application?

38 See, e.g., "Document SCT/6/3 Rev. on Geographical Indications: Historical Background, Nature of
Rights, Existing Systems for Protection and Obtaining Protection in Other Countries," World Intellectual
Property Organization (WIPO) Document SCT/8/4 (April 2, 2002) (Exhibit US-5); "The Definition of
Geographical Indications," WIPO Document SCT/9/4 (October 1, 2002) (Exhibit COMP-16).
39 As noted above, the United States responded to a specific hypothetical Pa nel question that "from a
practical point of view ... it would probably not be difficult to designate an office in the US government to
perform a purely ministerial act of transmitting registration applicat ions and objections to the EC."
(Para. 74. Emphasis added.) But, as the United States made plain in the following paragraph of the same
response, what the GI Regulation requires is far from the "purely ministerial act" . Th erefore, the EC is wrong
to claim that the United States regards the EC GI Regulation's requirements as a purely ministerial act.
40 US Response to First Set of Panel Questions, para. 75.

62. Paragraphs 142-144. The EC offers no answer whatsoever to the Panel's direct question of
why it is "necessary" for WTO Members to transmit objec tions to the EC, other than to claim that it is
purely ministerial (which, despite the EC's misch aracterization of the US responses to the Panel
questions, it is not), and that it "does not have any significant impact on trade in goods." But the issue
under Article XX(d) of the GATT 1994 is whether the measure is "necessary to secure compliance"
with a WTO-consistent law or regulation, not whet her the EC believes that the requirement will have
a significant trade impact or whether it is "purely ministerial". Indeed, panels and the Appellate Body
have emphasized that a breach of Article III:4 of the GATT 1994 does not require a showing of an
actual trade impact.
41 If this is the best the EC can do to meet its Article XX(d) burden, the EC's non-
response only adds weight to the conclusion that such a requirement is not necessary.

63. The United States also notes that, the EC's st atement to the contrary notwithstanding, the
United States has included deficiencies in the GI Regulation's right of objection as a part of its
arguments under the GATT 1994.
42

64. Paragraph 145. Article 6(6) of the GI Regulation, which applies to EC-based GIs, only
requires that there be a "clear distinction in practice" between the two EC-based homonyms, without
any specific requirement of country of origin labe ling. This is an admission in the GI Regulation
itself that a requirement for country of origin labeling is not "necessary", since it apparently is
unnecessary with respect to EC-based GIs.

65. Paragraphs 146-149. The EC has presented no reasons why it could not itself designate
inspection bodies in the United States or conduct its own inspections. The EC suggests that,
somehow, because such inspections may require on-s ite audits and inspections, these options are not
possible. But the United States does not see why eith er of those options is inconsistent with the
possible need for on-site inspections or audits.

66. The Panel did not ask why the EC does not itself conduct the inspections, but the EC
nevertheless volunteers that any such option woul d require the agreement of the WTO Member
concerned. But this does not appear to present any impediment to the EC itself conducting its own
inspections in relation to the requirements of its own Regulation. The EC offers no suggestion that
Members would object to such inspections. Ind eed, the EC's citation to the WTO Antidumping and
SCM Agreements
43 confirms the groundlessness of the EC's objections. It is true that the
Antidumping and SCM Agreements provide rules rela ted to on-site verifications in the exporting
country of information provided to the impor ting country's antidumping and countervailing duty
administrators. However, those agreements did not provide the "right" to carry out those
verifications. Long before these agreements were in place, both the EC and the United States
conducted such on-site verifications in the exporting country as part of antidumping and
countervailing duty investigations. The only thing that changed as a result of the Antidumping and
SCM Agreements is that those verifications were subj ected to certain disciplines. Consequently, it is
simply untrue that, in the absence of a specific WTO agreement, the EC cannot provide for on-site
inspections outside of the EC.

67. Finally, it is equally untrue that the EC GI Regulation requirements are fully compatible with
the practices of the parties in the field of conf ormity assessment, as asserted by the EC. The United
States does not see the relevance of the EC's refere nce to its response to Panel question 127, but the

41 See US Response to First Panel Questions, para. 65, citing, US – Gasoline, US – Section 337, US –
FSC (Article 21.5).
42 See, e.g., US Second Written Submission, paras. 89-95.
43 Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994
and Agreement on Subsidies and Countervailing Measures, respectively.

United States is aware of the normal practice th at importing countries impose their own inspection
requirements in the territory of the importing count ry, as necessary, to ensure that imported products
meet any applicable requirements. See US Response to Second Set of Panel Questions, paragraphs
50-51. Even where on-site inspections of manuf acturing facilities are required, as is the case, for
instance, with respect to pharmaceutical manufac turing facilities, such on-site inspections are
primarily carried out by the administering authorities of the importing country. In addition, consistent
with the TBT Agreement, an importing party ma y agree to accept the results of conformity
assessment procedures conducted in the exporting c ountry, and may designate conformity assessment
bodies in that territory for that purpose.44 However, this is very different from a situation in which the
exporting WTO Member is required to establish in spection structures as dictated by the importing
country, as is required under the GI Regulation.

68. Paragraph 152 . Again, the EC offers no reason that WTO Members themselves must
establish specific inspection structures, instead of permitting the rightholder to provide the necessary
assurances, including through independent inspecti ons. The EC merely asserts, with no reason or
justification, that inspection bodies can only carry ou t their functions "through some form of public
oversight." But this is a conclusion without reasons , and is insufficient to demonstrate that such a
requirement is "necessary".

69. Paragraph 153 . As above, the EC offers no reason why it could not itself conduct any
necessary inspections or designate bodies that could. It is of course, irrelevant that EC producers may
have to pay for inspections; nothing would pr event requiring appropriate payment from non-EC
producers.

70. Paragraphs 154-155. In these paragraphs, the EC is simply attempting to back away from the
rigid inspection requirements imposed on non-EC WTO Members that are plainly set out in Article 10
of the EC GI Regulation.

Overview of Comments to Trademark Questions 137-156

71. To assist the Panel in considering the specifi c US comments on each of the EC responses with
respect to trademark rights, which are set out furt her below, the United States believes it useful to
present the following initial overview of those comments.

72. The United States argues that the GI Regulatio n deprives the owner of a registered trademark
of its ability to prevent third parties from using identi cal or similar signs in a manner that results in a
likelihood of confusion, as requi red by Article 16.1. The EC ess entially acknowledges that the GI
Regulation is inconsistent with TR IPS Article 16.1 when, at paragraph 166 of its responses, it states
that it "can confirm that a trademark owner cannot prevent the holders of a registered geographical
indication from using the name or names registered under Regulation 2081/92 on the grounds that the
use of such name or names is confusing per se with an earlier trademark." This is a clear admission
that the GI Regulation is inconsistent with Article 16.1. In its defense, the EC then justifies this
departure from the requirements of Article 16.1 in four ways:

 – Article 14(3) of the GI Regulation preven ts registration of GIs that are confusingly
similar to prior registered trademarks, thereby preserving the Article 16.1 rights of
trademark owners.

 – TRIPS Article 24.5 allows for the coexistence of a GI with an earlier registered
trademark.

44 See US Response to Second Set of Panel Question, para. 50.

 – TRIPS Article 24.3 prevents the EC fr om implementing the pr otections of TRIPS
Article 16.1 because it would "diminish the protection of geogra phical indications
that existed in that Member immediately prio r to the date of entry into force of the
WTO Agreement."

 – TRIPS Article 17 allows for the elimin ation of the TRIPS Article 16.1 rights as a
"limited exception."

73. None of these explanations is sufficient to justify departure from the strict requirements of
TRIPS Article 16.1.

EC GI Regulation Article 14(3)

74. The EC's reliance on Article 14(3) as a rough substitute for a trademark owner's Article 16.1
rights is misplaced in several respects. In sum, even if the EC's reading of Article 14(3) is correct, the
provision does not grant trademark owners the right to prevent "use[s] in the course of trade" of
identical or confusingly similar signs. Importantly , however, the EC's reading of Article 14(3) is
incorrect, and inconsistent with how the provision has been interpreted by the EC outside the confines
of this dispute.

75. As the United States has shown, merely enabling the EC authorities to deny registration of a
GI that is identical or confusingly similar to a valid prior registered trademark is not sufficient. In its
comments, the United States demonstrates that not a ll (and in fact not many) trademark owners will
be entitled to challenge before EC or member Stat e courts the failure by the EC authorities to use
Article 14(3) to deny registration of particular GIs. For example, GIs registered via accession treaties
are not subject to invalidation pursuant to Article 14(3), and therefore any trademarks with which
such GIs are confusingly similar are not provided Article 16.1 rights.

76. Additionally, Article 16.1 requires Members to grant trademark owners the right to prevent
"us[es] in the course of trade" that result in a like lihood of confusion with respect to their trademarks.
The EC's reliance on Article 14(3) presupposes that a trademark owner will necessarily be able to
know, at the time of registration, every way in whic h a GI rightholder will use the registered name,
and how consumers in any given territory in the EC will perceive that use. The United States has
shown that a trademark owner will not necessarily so know. Nonetheless, the EC makes clear that to
enjoy its Article 16.1 rights, the owner of a trademark in one member State can not simply seek to
enjoin "use[s] in the course of trad e" of an identical or similar GI that confuse consumers in that one
member State, but must first invalidate the GI on an EC-wide basis, on a showing that consumers
EC-wide are confused (presuming, incorrectly, that Article 14(3) includes a "likelihood of confusion"
standard).
45 Thus, even if the EC's reading of Article 14(3) were correct, it would not constitute an
adequate substitute for Article 16.1 rights.

77. Moreover, and putting these points aside, the EC 's argument that Article 14(3) is essentially a
"likelihood of confusion" standard is simply not supportable. The plain wording of Article 14(3)
demonstrates that it requires a different standard fro m likelihood of confusion: Article 14(3) enables
the EC authorities to deny registration of a GI where the GI would "mislead the consumer" with
respect to a prior trademark, in light of that trad emark's reputation, renown and length of time of use.
The "likelihood of confusion" standard and th e "mislead the consumer" standard are clearly
distinguished elsewhere in EC law, and the use of one over the other in the EC GI Regulation is not
accidental.

45 See Exhibit US-73, pg. 6 (the EC "examines consumer confusion ... with respect to the whole
European public.").

78. Finally, the EC Guide to the GI Regulation c onfirms that Article 14(3) grants authority to
deny registration "only in one circ umstance" – when faced with a pr ior valid trademark that enjoys
reputation, renown and use. While the EC argues th at the reference in Article 14(3) to reputation,
renown and use are merely shorthand references to a few of the factors involved in a likelihood of
confusion analysis, the United States has shown that in EC and member State law and jurisprudence,
those three elements are not necessary to find a likelihood of confusion. They are, however,
prerequisites to the denial of registration for a GI, under Article 14(3). In the EC's view, these
prerequisites in Article 14(3) even override the pres umption, in TRIPS Article 16.1, that use of an
identical sign on identical goods raises a likelihood of c onfusion. The EC goes so far as to state that a
trademark owner cannot enjoin use of an identical GI on identical goods, unless it can show that the
trademark has been used and is known to the public in the EC.46

Article 24.5

79. The EC continues to argue that Article 24.5 is not an exception to GI protection, despite the
fact that (1) by its very terms, Article 24.5 limits the protection of GIs vis-à-vis trademarks, thereby
constituting an exception to GI protection (and not to trademark protection); and (2) Article 24.5 is a
part of Article 24, which is labeled "internati onal negotiations; exceptions". As an exception,
Article 24.5 acts as a shield for covered trademar ks against GIs, and contains no provisions for
limiting trademark rights. The EC's reliance on Artic le 24.5, apparently by negative implication, as
allowing for coexistence of trademarks and conflic ting GIs denies the drafters' ability to specifically
provide for coexistence when coexistence is intended.

Article 24.3

80. By its terms, Article 24.3 has no place in a discussion as to whether the obligations of
Article 16.1 are met. It is telling that the EC failed to answer the direct question from the Panel as to
whether an obligation to diminish the pre-existi ng protection of GIs in order to allow trademark
owners to exercise their rights under Article 16.1 w ould arise under Article 16.1 or the GI section.
The Panel's question derives from the fact that TRIPS Article 24.3 prevents diminishment of
protection for GIs that could be caused by "implementi ng this Section", referring to Part II, Section 3
of the TRIPS Agreement. It follows that any dimi nishing of GI protection that could arise by virtue
of implementation of another section of the TRIPS Agreement, including the trademark section, is not
prohibited by Article 24.3.

Article 17

81. The immunity provided to GI owners for the u se of registered GIs is far from being a "limited
exception" to the Article 16.1 trademark rights unde r Article 17 of the TRIPS Agreement. The EC GI
Regulation in fact provides for a blanket, or unlimited, exception to the protections of Article 16.1.
The EC seems to defend the exception as being "limited" because it would only be an exception in a
limited number of cases. That is not what is required by Article 17: it must be a limited exception
even if it is an exception with respect to only one trademark.

82. Further, the GI Regulation does not take into account the interests of anyone other than
producers of certain agricultural products. In r esponding to the question as to what the "legitimate
interests of the owner of the trademark" are, the EC begins with the remarkable statement that "[a]
trademark which has never been used or which is virtually unknown ... could be easily replaced
without significant prejudice to the owner." This re veals an utter failure to take into account the
interests of the trademark owner, much less the population of consumers wh o would undoubtedly be

46 EC Responses to Questions following the Second Panel Meeting, para. 220.

confused by having, for example, identical term s used on identical products side-by-side on the
grocery store shelves.

83. Lastly, the EC's defense of the GI Regulation implies that all uses of registered GIs must be
automatically entitled to the "fair use" exception by simple virtue of registration alone, without
considering the facts of a particular case or whethe r such "use" is actually "fair". Especially given
that non-geographic terms can be registered pursuant to the GI Regulation, it is difficult to understand
how all uses of a registered GI can be unequivocally deemed "fair". One problem is that the GI
Regulation provides blanket rights to use the GI ra ther than considering each particular use on a
case-by-case basis, as is the case under the trademark la ws of the EC and other jurisdictions the EC
references in its responses. The EC offers the possibility that a trademark owner may resort to
particular labeling and misleading advertising laws, as well as member State unfair competition laws.
But even if recourse to such laws were possible, they do not consider the interests of trademark
owners in the manner required by TRIPS Article 17; they may be sufficient to meet the general
obligations of Article 10 bis of the Paris Convention, but they ar e not sufficient to meet the specific
trademark obligations under the TRIPS Agreement.

84. US comments with respect to each of th e EC's responses to Panel questions follows.

Question 137

85. As it has throughout this dispute, the EC i gnores fundamental problems with its argument that
Article 14(3) serves as an adequate substitute fo r TRIPS Article 16.1. As the United States has
frequently noted, Article 14(3) merely enables the EC authorities to deny registration of a GI.
Moreover, the EC is enabled by Article 14(3) to do so "only in one circumstance" – when faced with a
prior valid trademark that enjoys reputation, renown and use.
47 In contrast, TRIPS Article 16.1
requires the EC to grant trademark owners the right to prevent confusing " use[s] in the course of
trade" of identical or similar signs. Nor are Article 16.1 rights limited only to those trademarks that
enjoy reputation, renown and use.

86. The EC's response to the Panel's question can be distilled down to two related statements.
First, the EC states that under Article 14(3) of the EC GI Regulation, "the EC authorities will refuse a
proposed geographical indication [if it] is anticipated that, when used in what the United States calls
'trademark-like fashion', it will result in a likelihood of confusion."
48 Similarly, the EC asserts that
"[i]n principle, a name which has been found not to be confusing per se following the assessment
required by Article 14(3) should not give rise to confusion when used subsequently."

87. Putting this "principle" to the test, howeve r, demonstrates the critical error in the EC's
assertion that Article 14(3) adequately substitutes for TRIPS Article 16.1 rights. The EC asserts that
if a GI is not per se confusingly similar to a prior valid registered trademark at the time the GI is
registered, then it is impossible that unanticipated uses that raise a likelihood of confusion could
subsequently arise.

88. The fact is, however, that confusing uses not foreseen at the time of application for, and
registration of, a GI can arise. As the United States has explained, a trademark owner will not
necessarily know, at the time of registration, what uses a GI rightholder will employ, or how

47 Guide to Community Regulations, "Protection of Geographical Indications, Designations of Origin
and Certificates of Specifi c Character for Agricultural Products and Foodstuffs" (Working Document of the
Commission Services issued by the European Commission Directorate-General for Agriculture, August 2004),
pg. 24. Exhibit EC-64.
48 EC Responses to Questions following the Second Panel Meeting, para. 161 (emphasis added).

consumers in a particular territory will perceive t hose uses. This is so for several reasons, two of
which the United States addresses below.

89. First, the United States has shown that product specifications – if available for review by
trademark owners
49 – do not necessarily contain the "specific labelling details" that the EC asserts will
offer definitive and circumscribed guidance on tho se uses of the GI that may arise and would be
permitted or specifically prohibited. 50 Even if a product specification did include "specific labelling
details" limiting the presentation of the sign on a product label, it is evident that the manner in which a
GI is presented on a product label, on the one hand, and how that GI is marketed or promoted, on the
other hand, can be two very different things. Labeling details included in a product specification have
no necessary bearing on how the GI is used in marketing or promotion of the sign.51

90. Second, the EC acknowledges that a GI registra tion gives authorized users the right to use the
registered term in a manner that is c onsiderably more than merely descriptive.
52 Under the TRIPS
Agreement, this is perfectly acceptable, as long as such use does not breach other provisions of the
Agreement. The United States does not in any way, as the EC seeks to imply, 53 suggest otherwise.
This point simply illustrates that the range of uses th at a rightholder in a GI registered in the EC is
authorized to employ is not necessarily readily apparent at the time of registration. It also
demonstrates that there is not nearly as clear a di stinction as the EC implies between use of the sign
registered, which it says is authorized, and use of "other names,"
54 which it says is not authorized.
Nor is it, as the EC suggests, a simple matter of distinguishin g between the sign registered and
"deformed, mutilated or otherwise manipulated" use of that sign. 55 The EC's acknowledgment that a
GI rightholder is entitled to use the term in a "tra demark-like" fashion shows that the universe of
potential and authorized uses of the sign registered is not a finite concept, an d is certainly not evident
at the time of registration. If uses that would conf use consumers in a particular territory with respect
to an identical or similar prior registered trademar k arise at some later date, Article 16.1 grants the
owner of that trademark the right to enjoin them. Article 14(3) does not.

91. The United States makes one final observation on the EC's response. Oddly, the EC repeats
its assertion that three GIs registered pursuant to the Czech Republic's Act of Accession to the EU are
"outside the Panel's terms of reference."
56 As the Panel is aware, the United States is challenging the
consistency of the EC GI Regulation itself with TRI PS Article 16.1. It has not raised claims against
the three Czech GIs.57

92. Although it is clear that a complainant need not show actual application of a measure in
contravention of an obligation, much of the EC's first written submission was devoted to its view that

49 The United States notes that in many instances, the product specifica tions are withheld or otherwise
not available. US Responses to Questions following the Second Panel Meeting, para. 65.
50 See US Opening Oral Statement at Second Meeting, para. 78, and Exhibit US-77.
51 It is possible that the labeling details included in a product specification might speak more generally
about marketing of the product in general, such as the Bitto product specification included in Exhibit EC-99.
However, as the Panel will note, other product specifications, including those in Exhibits EC-101 and US-77, do
not always include such limits.
52 See EC Oral Statement at Second Meeting, para. 184; EC Responses to Questions following the
Second Panel Meeting, para. 161.
53 EC Oral Statement at Second Meeting, paras. 161, 180.
54 See EC Responses to Questions following the Second Panel Meeting, para. 167.
55 EC Responses to Questions following the Second Panel Meeting, para. 162.
56 EC Responses to Questions following the Second Panel Meeting, para. 157. See also EC Second
Written Submission, para. 292.
57 Of course, as noted below, the Panel's findings could affect trademark rights in future disputes
regarding infringing uses of these GIs.

the US and Australian claims under TRIPS Article 16.1 are "purely theoretical."
58 According to the
EC, this is either because trademarks containing or consisting of geographical elements lack
distinctiveness and are as such not registrable (thus making the possibility of conflicts with identical
or similar registered GIs unlikely), or because Artic le 14(3) would prevent the registration of any GI
that raises a likelihood of confusion with a prior registered trademark.

93. To demonstrate that its claims were not "pur ely theoretical," the United States, in response to
a request from the Panel to disclose the names of any registered GIs that are identical or confusingly
similar to EC trademarks, offered several examples, 59 including the three Czech GIs. 60 The United
States noted that the rightholders in the three GIs are asserting a right, based on the registration, to use
these three names in translation, 61 in a way that has in some juri sdictions been found to raise a
likelihood of confusion with respect to prior valid registered trademarks.62

94. Moreover, the United States has noted that Ar ticle 14(3), which the EC has asserted provides
protection for all prior registered trademarks against regist ration of confusingly similar GIs, does not
in fact protect all such trademarks. In its co mments on the EC response to question 142, below, the
United States shows how significant numbers of tr ademarks and trademark owners will not be
accorded any rights under Article 14(3). As one ex ample, the United States has noted that GIs (like
the three Czech GIs) registered via acts of accession are immune from challenges to their validity on
the basis of Article 14(3), even if they are iden tical or confusingly similar to prior registered
trademarks.
63

95. Thus, it is not relevant whether the three Czech GIs, or the other examples cited by the United
States, are within the Panel's terms of reference. The United States has used those GIs as illustrations
of the manner in which the EC GI Regulation op erates and the scope of protection granted by
registration under the Regulation, and as a means of rebutting erroneous factual assertions made by
the EC about its law in the course of this disput e. They are relevant to the Panel's "objective
assessment of the facts of the case," within the mean ing of Article 11 of the DSU. Moreover, to the
extent that the Panel's findings address the ri ghts that should be accorded trademark owners vis-à-vis
particular uses of identical or similar GIs on identical or similar goods and services, those findings
would be relevant to trademark rights in future disputes regarding infringing uses of those example
GIs.

Question 138

96. The United States submits that the phrase "[ w]ith due regard to Community law" in
Article 14(2) of the EC GI Regulation, also refers to the provision in Article 142 of Regulation (EC)
No. 40/92, which the EC describes as meaning that the relationship between trademarks and GIs is
controlled by the GI Regulation.

59 US Responses to Questions following the First Panel Meeting, para. 79; US Second Written
60 US Responses to Questions following the First Panel Meeting, paras. 77-78. See also US Second
Written Submission, para. 134; US Responses to Questions following the Second Panel Meeting, para. 68.
61 Exhibit US-53.
62 US Responses to Second Set of Panel Questions, para. 70, Exhibits US-81 through US-83. As a
result, the EC's statement that "the United States does not argue that any of [the three Czech names] gives rise to
a likelihood of confusion with the na me 'Budweiser'" is in error. See EC Responses to Questions following the
Second Panel Meeting, para. 157.
63 See US Closing Statement at Second Panel Meeting, para. 18; US Responses to Questions following
the Second Panel Meeting, para. 68 (note 36).

Question 139

97. Paragraph 166 of the EC's response essentia lly constitutes an admission that the GI
Regulation is inconsistent with TRIPS Article 16.1:

The EC can confirm that a trademark owner cannot prevent the holders of a registered
geographical indication from using the name or names registered under Regulation
2081/92 on the grounds that the use of such name or names is confusing per se with
an earlier trademark.
98. Article 16.1 grants trademark owners the right to enjoin uses of identical or similar GIs that
raise a likelihood of confusion. The EC denies trademark owners that right, and thus violates
Article 16.1.

99. The EC continues, in paragraph 167, to state that two factors qualify the right to use the
registered GI. First, the EC states that "the right to use the registered name does not confer a right to
use other names not covered by the registration, or to use the registered name together with other
signs or as part of a combination of signs."
64 As the United States noted in its comment on the EC
response to question 137, however, a distinction betw een use of the sign registered, and use of "other
signs," simply begs the question of what uses of th e registered sign are authorized. The EC has noted
that registration confers the right to use a GI in a manner that is considerably more than merely
descriptive. Specifically, the EC h as stated that registration confer s the right to use the GI in a
"trademark-like sense."65 While this is in principle perfec tly legitimate under the TRIPS Agreement,
it demonstrates that potential uses of the GI are broad, and that the owner of an identical or similar
prior registered trademark will not necessarily be awar e of all potential uses at the time of registration
– much less which of those uses will be consider ed confusingly similar by consumers in a given
territory. Therefore, as required by Article 16.1, th e owner needs the opportunity to enjoin those uses
"in the course of trade" as they arise.

100. Second, the EC states that labeling, misl eading advertising, and unfair competition laws
qualify the right to use a registered GI. Howeve r, those laws are not adequate substitutes for
Article 16.1 rights. The EC does not argue that thos e laws permit a trademark owner to enjoin use of
identical or similar signs that raise a "likelihood of confusion."

101. In paragraph 169, the EC states that registrati on of a GI "establishes a legal presumption that
the use of that name as a geographical indication does not give rise per se to a likelihood of confusion
with an earlier trademark . . ." The EC continues, stating that "[i]n order to be able to exercise its
trademark rights the trademark owner must rebut first that legal presumption by invalidating the
registration of the geographical indication." The lega l basis to do so, according to the EC, is found in
Article 14(3) of the GI Regulation.

102. Under TRIPS Article 16.1, however, the owner of a registered trademark has the right to
enjoin confusing uses of identical or similar signs. Nothing in Article 16.1 suggests that this right is
contingent on the owner first rebutting any presump tion created by the subsequent registration of a
confusingly similar sign under the EC GI Regulation. (In fact, Article 16.1 includes a presumption
that operates in precisely the opposite manner implemen ted by the EC in the GI Regulation. With
respect to uses of identical signs on identical goo ds or services, Article 16.1 presumes that the
competing sign raises a likelihood of confusion.)

64 EC Responses to Questions following the Second Panel Meeting, para. 167.
65 See EC Oral Statement at Second Panel Meeting, para. 184; EC Responses to Questions following

103. Nor is there anything in Article 16.1 that re quires the trademark owner to first "invalidate"
any intellectual property rights associated with the sim ilar sign before enjoining a use of that sign that
confuses consumers in a given territory. As th e United States has previously observed, under
Article 16.1, rather than seeking invalidation of a GI registration on an EC-wide basis, the owner of
an identical or similar prior trademark registered in one EC member State is entitled to prevent
particular "uses" of the GI that confuse consumers in that member State.
66 The EC has previously
stated that to invalidate a GI on an EC-wide basis, the owner of a trademark would need to prove that
consumers are confused "with respect to the whole European public."67

104. For these reasons, invalidating a GI registrati on under the standard included in Article 14(3)
involves a considerably higher showing than would be required simply to enjoin particular uses "in
the course of trade" that confuse consumers in a particular member State, under Article 16.1 (or
rather, as implemented in EC law, under Ar ticle 5 of the EC Trademark Directive).
68 Article 14(3) is
not, therefore, an adequate substitute for Article 16.1.

105. The EC notes, in paragraphs 163 and 170, that some WTO Members may require the owner
of a prior registered trademark to first invalidate a later similar or identical trademark before pursuing
an infringement claim against the latter mark. The United States' claims in this dispute involve the
consistency of the EC GI Regulation alone with TRIPS Article 16.1. Other Members' measures are
not at issue in this dispute.

106. The United States also notes, however, that th e provisions of other Me mbers' laws cited in
footnote 68 to the EC's response are not analogous to Article 14(3). In those instances, the grounds
for invalidating a later-in-time trademark are the same as the grounds for establishing infringement
with respect to an earlier-in-time trademark.
69 As noted in paragraph 163 of the EC's response, the

66 US Responses to Questions following the Second Panel Meeting, para. 69; US Closing Statement at
Second Meeting, para. 17.
67 Exhibit US-73, pg. 6.
68 The United States also reiterates that while Article 16.1 provides rights to owners of all registered
trademarks, Article 14(3) provides those rights only to owners of trademarks that enjoy reputation, renown and
use. See Guide to Community Regulations, "Protection of Geographical Indications, Designations of Origin and
Certificates of Specific Character for Agricultural Products and Foodstuffs" (Working Document of the
Commission Services issued by the European Commission Directorate-General for Agriculture, August 2004),
pg. 24. Exhibit EC-64.
69 As is a consistent theme in this case, the EC tells only part of the story – leaving the Panel with an
incomplete and misleading picture of relevant law and le gal principles. All of th e countries whose laws are
cited to in footnote 68 of the EC's response are members of the Commonwealth and have historical ties to the
United Kingdom. Hence, the law of the United Kingdom is representative of the general approach taken to this
matter by the countries whose laws are cited to by the EC. As noted in the excerpt of the United Kingdom's
Trade Marks Act 1994 cited to by the EC (Section 11(1)), the provision is subject to Section 47 of that Act on
declaration of invalidity of registration. Section 47(2) pr ovides that "[t]he registration of a trade mark may be
declared invalid on the ground ... that there is an earlier trade mark in rela tion to which the conditions set out in
section 5(1), (2) or (3) obtain." Section 5(1) and (2) read as follows:

(1) A trade mark shall not be registered if it is identical with an earlier trade mark and the
goods or services for which th e trade mark is applied for are identical with the goods or
services for which the earlier trade mark is protected.

(2) A trade mark shall not be registered if b ecause— (a) it is identical with an earlier trade
mark and is to be registered for goods or services similar to those for which the earlier trade
mark is protected, or(b) it is similar to an earlie r trade mark and is to be registered for goods
or services identical with or similar to those for which the earlier trade mark is protected, there
exists a likelihood of confusion on the part of the public, which includes the likelihood of
association with the earlier trade mark.

grounds for invalidating the later-in-time mark are th at it is confusingly similar to an earlier-in-time
mark, which is of course also the standard for establishing infringement, under national laws
implementing TRIPS Article 16.1.

107. The grounds included in Article 14(3) for inva lidation of a GI, however, are not the same as
the grounds for establishing infringement with respect to a prior registered trademark. Indeed, as
noted above, the national trademark laws cited to by the EC include precisely the Article 16.1
standard as the basis for determining whether a trademark should be registered over an earlier
trademark. The grounds included in Article 14(3) and 16.1 differ in two important respects.

108. First, and as noted above, in determining whet her to deny registration under Article 14(3), the
EC "examines consumer confusion ... with respect to the whole European public."
70 In contrast, in
determining whether use of a similar sign raises a li kelihood of confusion with respect to a trademark
registered in one EC member State, courts determine whether consumers in that member State are
confused. The EC Trademark Regulation provides for relative grounds of refusal of a Community
trademark application in Article 8. The owne r of an earlier trademark may file an opposition
(Article 42) or invalidation acti on (Article 52) against the regist ration of a confusingly similar
Community trademark. Article 8(1)(b) provides: Upon opposition by the proprietor of an earlier trade
mark, the trade mark applied for shall not be registered:

if because of its identity with or similarity to the earlier trade mark and the identity or
similarity of the goods or services covered by the trade marks there exists a likelihood
of confusion on the part of the public in the territory in which the earlier trade mark
is protected; the likelihood of confusion includ es the likelihood of association with
the earlier trade mark." (emphasis added)
109. The EC Trademark Regulation itself therefore provides that the likelihood of confusion must
be assessed with regard to the te rritory in which the earlier trademark is protected. According to
Article 8 (2) of the Trademark Regulation, an ear lier trademark is not only an earlier Community
trademark, but also includes a trademark registered in an EC member State. Hence, assessing whether
a likelihood of confusion exists be tween a trademark application and an earlier trademark registered
in an EC member State requires an examination of whether a likelihood of confusion exists with
regard to the public in that particular member State.
71

Section 47(6) then provides that "[ w]here the registration of a trade mark is declared invalid to any
extent, the registration shall to that extent be deemed never to have been made."
70 Exhibit US-73, pg. 6.
71 See, e.g., Case T-99/01, Mystery/Mixery, 15 January 2003, para. 37 ("In this case, given that
beverages in Class 32 are everyday consumer items and that the earlier mark on which the opposition is based is
registered and protected in Germany, the relevant public by reference to which the likelihood of confusion must
be assessed is composed of average consumer s in that Member Stat e."); Case T-104/01, Fifties/Miss Fifties,
23 October 2002, para. 29 ("In this case, given the na ture of the goods concerned (denim clothing) which are
everyday consumer items, and the fact that the earlier ma rk on which the opposition is based is registered and
protected in Spain, the targeted public by reference to which the likelihood of confusion must be assessed is
composed of average consumers in Spain."); Case T-10/03, Conforflex/Flex, 18 February 2004, para. 39 ("In
this case, given the nature of the goods concerned, namely items of bedding and bedroom furniture, which are
everyday consumer items, and the fact that the earlier marks are registered and protected in Spain, the target
public with reference to which the likelihood of confusion must be assessed is composed of average consumers
in Spain."). These decisions, which were similarly cited in footnote 74 to the US Responses to Questions
following the Second Panel Meeting, are available at http://europa.eu.int/jurisp/cgi-bin/form.pl?lang=en. See
also OHIM Board of Appeal, Case R 433/2002-3, Tei-Fu/Tai-Fun, 11 December 2002, para. 26 ("The
assessment of whether the public will either confuse the marks in competition or make a connection between the
proprietors of those signs and confuse them, given the existence in the market of the mark applied for and the
earlier trade mark, must therefore be carried out from the perspective of the relevant public in Germany because

110. Second, as the United States has previously de monstrated, Article 14(3) does not include the
"likelihood of confusion" standard applied in in fringement cases. Rather, Article 14(3) adopts a
"mislead the consumer" standard. As noted in paragraph 104 of the US responses to the Panel's
questions, the words "mislead" and "confusion" have different meanings – the former used in the EC
GI Regulation in the sense of affirmatively leadi ng the public to believe something about the product
that is not true, and the latter used in Article 16.1 in the sense of a failure or inability to distinguish.

111. Moreover, as noted in paragraph 88 of the US responses to the Panel's questions, the EC
Trademark Regulation and Trademark Directive differentiate between the two standards.
72 Accepting
that "liable to mislead" in Article 14(3) actually means "likelihood of conf usion" would require the
Panel to overlook the objective fact that those sta ndards are expressly differentiated in EC trademark
law.

Question 140

112. In paragraphs 177-178, and Exhibits EC-99 through EC- 102, the EC offers "approved
specifications" for four cheeses referred to in Exhibit US-52.
73 The United States makes several
observations.

113. The Panel had asked the EC "what uses ... th e registrations ... permit." The EC has not
answered the Panel's question. Labeling specifications do not necessarily dictate or limit how or in
what ways the GI may be marketed or promot ed, as the United States has already noted in its
comment on the EC response to question 137.

114. Moreover, the "labeling details" included in th e specifications do not offer much guidance to
a trademark owner trying to figure out whether, at the time of registration, the GI could one day be
used in a manner that raises a likelihood of conf usion. The specification for Esrom, for example
(Exhibit EC-101) merely states that the label "must contain" particular words. It does not say that the
label must consist of those words and only those word s. The specification does not state that the label
may not also include other words or signs, in add ition to those that the label "must contain." The
labeling details for Bra (Exhibit EC-102) are also not specific, and merely state that "the product must
be marketed with the label of the relevant manufact urers' consortium." There are no limits placed on
what that label can contain or consist of; there is no guidance regarding how to determine what the
"relevant" manufacturers' consortia are, or any depiction of what their GI might look like in use on a
consortium's label. Even more dramatic are the product specifications included in Exhibit US-77,
which contain nothing more than a name or the word "PGI."

115. In none of these instances would the owner of a similar or identical trademark be able to tell,
from the registration and product specification itself, that the rightholder is authorized to use the
registered GI in the manner displayed in the pict orial depictions included in Exhibit US-52. The
simple point is that until the registered GI is used, the trademark owner will not necessarily know how

of the fact that the opposition is grounded on a national trade mark registration in th is Member State.") (also
cited by the United States, at footnote 77, and available at:
http://oami.eu.int/LegalDocs/BoA/2002/en/R0433_2002-3.pdf.
72 Compare Article 50.1(c) of EC Regulation 40/94 with Article 9.1(b) of that same measure. Exhibit
COMP-7. Compare also Article 12.2(b) of EC Directive 89/104/EEC wi th Article 5.1(b) of that same measure.
Exhibit COMP-6.
73 The United States offered specifica tions received from the EC author ities for these four cheeses, in
Exhibit US-52. Exhibits EC-99 through EC-102 contain additional pages, some of which are historical in nature
and which appear to speak to production methods, rather than offering guidance on the manner in which the sign
registered can or must be used.

it will be used, or if it will confuse consumers in a particular territory. For this reason alone,
Article 14(3) is not an adequate substitute for TRIPS Article 16.1.

116. The Panel has asked the EC how far the positive right to use a registered GI extends "before it
can be challenged under labeling and misleading advertising laws." Whatever the threshold, one thing
is clear – the EC has not established that EC a nd member State labeling and misleading advertising
laws, as well as unfair competition laws, include the same "likelihood of confusion" standard
contained in TRIPS Article 16.1.
74

117. To illustrate where the threshold falls, the EC refers to the Bayerisches Bier case, and states
as follows:

[I]f the holder of a geographical indication which has a right to use a certain name
(say "Bayerisches Bier") were to use it in a manner which imitates the label or the
packaging of the products of a trademark (" Bavaria"), this could be considered as a
breach of the laws on labeling and unfai r competition, even if the constituent
elements of the label or the packaging, other than the trademark itself, were not
covered by any intellectual property rights.
75
118. This example entirely misses the United States' point. The owner of the BAVARIA
trademark has the right, under Article 16.1, to enjoin any use of a sign similar to "Bavaria" that raises
a likelihood of confusion for consumers in a given territory. The trademark owner's right is not
limited to the ability to enjoin uses of a label or packaging that is similar to that included on its
products. Rather, it has the right, under Article 16.1, to enjoin use of any identical or similar sign – a
word, for example – that raises a likelihood of confus ion. As the EC makes clear with its example,
EC and member State labeling and misleading advertising laws, as well as unfair competition laws, do
not provide this right. Instead, they provide the right to prevent "imitating" uses not of the sign itself,
but of the sign in conjunction with other elements or other elements of the labeling or packaging that
do not necessarily include the sign at all.

119. The examples cited in paragraph 182 of the EC's response make a similar error. According to
the EC, EC and member State labeling and mislea ding advertising laws, or unfair competition laws,
would prohibit use of a GI "used together with other signs or statements that suggested or indicated
that the geographical indication is in fact the trademark of a producer." Again, the right in
Article 16.1 is to enjoin use of an identical or similar sign, as such, that raises a likelihood of
confusion.

Question 142

120. The United States' comments on the EC's res ponse to this question also include comments on
the EC's related responses to questions 2 and 3 from Australia.

121. The EC has asserted that if the owner of a pr ior registered trademark considers that the EC
has registered an identical or similar GI that ra ises a likelihood of confusion with respect to the
trademark, the owner can challenge the validity of th e GI registration, on the basis of Article 14(3) of
the EC GI Regulation. The EC asserts that this is a sufficient substitute for the right, under TRIPS
Article 16.1, to enjoin confusing uses of identical or similar signs.

74 Those standards are in fact different from the "likelihood of confusion" standard included in TRIPS
Article 16.1. See, e.g., the standards included in paragraph 143 (and notes 38-40) of the EC Responses to
Questions Following the First Panel Meeting.
75 EC Responses to Questions following the Second Panel Meeting, para. 181.

122. To begin, the United States has demonstrated that Article 14(3) does not embody the
"likelihood of confusion" standard required by TRIPS Article 16.1 ( see, e.g., the United States'
comment on the EC's response to question 139, above). Moreover, requiring a trademark owner to
seek invalidation of a confusingly similar registered GI, rather than granting the owner the right to
enjoin only those "uses" of the GI that confuse consum ers in a particular territory, is inconsistent with
Article 16.1 ( see the United States' comment on the EC's response to question 139, above).
Additionally, Article 14(3) is not available to ow ners of trademarks that do not enjoy reputation,
renown and use. The Commission's Guide to Regulation 2081/92 unequivocally confirms this
reading.
76

123. For these reasons alone, Article 14(3) does not serve as an adequate substitute for Article 16.1
rights.

124. For the sake of argument, however, the Un ited States would like to leave these threshold
points aside. Even so, however, for the ability to chal lenge the validity of a GI under Article 14(3) to
serve as an adequate substitute for Article 16.1, the ability to challenge must be available to owners of
all valid registered trademarks , because Article 16.1 provides rights to owners of all
 valid registered
trademarks.

125. The ability to challenge the validity of a regi stered GI on the basis of Article 14(3), however,
is not available to owners of all valid registered tr ademarks. To demonstrate this in graphic terms, the
United States includes as Exhibit US-99 and US-100 two flowcharts. Exhibit US-99 is a flowchart for
challenges to the validity of a GI registration brought directly to the Court of First Instance, pursuant
to Article 230 of the EC Treaty. Exhibit US-100 is a flowchart for challenges to the validity of a GI
registration brought to EC member State courts and then referred to the European Court of Justice
("ECJ"), pursuant to Article 234 of the EC Treaty.

126. These flowcharts demonstrate that many tradem ark owners will not be able to challenge the
validity of a GI registration either in a case brought di rectly to the CFI, pursuant to Article 230 of the
EC Treaty, or in a case brought to a member Stat e court and referred to the ECJ, under Article 234.
77
The shaded boxes in the charts represent categori es of trademark owners for which Article 14(3)
would provide no opportunity to challenge the valid ity of a registered GI. These trademark owners
would be denied the opportunity to challenge the va lidity of a GI for reasons that are not relevant
grounds for denying an owner its rights under TR IPS Article 16.1. Exhibit US-101 provides a
detailed explanation of the flow charts and of the inability of many trademark owners to challenge GI
registrations under the EC Treaty.

127. The United States makes one brief comment on the EC's response to question 142(d). The
EC has often stated that Article 14(3), supplemente d by other provisions of the EC GI Regulation,
provide grounds for cancellation of a GI registration on the basis that the GI is identical or
confusingly similar to a prior trademark. Yet, in its response to question 142(d) (at paragraph 189),
the EC states that the "g rounds for cancellation mentioned in Articles 11 and 11a are exhaustive."
78

76 Guide to Community Regulations, "Protection of Geographical Indications, Designations of Origin
and Certificates of Specifi c Character for Agricultural Products and Foodstuffs" (Working Document of the
Commission Services issued by the European Commission Directorate-General for Agriculture, August 2004),
pg. 24. Exhibit EC-64.
77 The United States notes that over the period 1999-2003, EC member State courts referred a total of 8
intellectual property cases to the ECJ, pursuant to Article 234. These statistics are available in the ECJ's annual
reports, titled "Statistics of Judicial Activity of the Court of Justice," at
http://curia.eu.int/en/instit/presentationfr/index.htm. In each annual report, the statistics are maintained in Table
11, in the column "References for a preliminary ruling".
78 Emphasis added.

The grounds for cancellation included in Articles 11 and 11a do not address cancellation based on
likelihood of confusion with a registered trademark.

Question 143

128. The United States simply notes that the EC o ffers absolutely no documentary support for its
assertion
79 that the Council, in considering the relevan ce of Article 14(3) in the Bayerisches Bier,
considered factors other than whether valid pr ior registered trademarks for BAVARIA enjoyed
reputation, renown and use.

Question 145

129. The United States and the EC agree that the c overage of Article 24.5 is not necessarily limited
to the specific articles mentioned in the Panel's question ( i.e., Articles 22.2, 22.3, 23.1, and 23.2).
80
The agreement between the United States and EC, however, appears to end there.

130. The EC continues to argue that Article 24.5 is not an exception to GI protection, this time
with the qualifier that Article 24.5 is not a "genuine exception" like those in Articles 24.4, 24.6, 24.7,
and 24.8. 81 While the EC points to nothing in Article 24 of the TRIPS Agreement that supports a
distinction between "genuine exceptions" and other, presumably "non-genuine" exceptions, the United
States notes that the EC now apparently includes Ar ticle 24.4 as a "genuine exception", while at the
same time leaving Article 24.9 off the list, in co ntrast to its second written submission, where Articles
24.6-24.9 (but not Article 24.4) were considered exceptions by the EC. 82 These unsupported and
rapidly-changing characterizations of clearly-label ed exceptions to GI protection in Article 24 do
nothing to contradict the understanding derived from an analysis of Article 24.5 based on the ordinary
meaning of the terms, in their context, in light of the object and purpose of the TRIPS Agreement.
Through such an analysis, the United States has dem onstrated, in part, that (1) by its very terms,
Article 24.5 limits the protection of GIs vis-à-vis trademarks, thereby constituting an exception to GI
protection; and (2) Article 24.5 is a part of Artic le 24, which is labeled "international negotiations;
exceptions", and it is undisputed that Article 24.5 does not relate to "international negotiations."83

131. The EC states that Article 24.5 "imposes sel f-standing [positive] obligations with respect to
the protection of trademarks" and therefore is not an "exception" to GI protection.
84 As the United
States has explained, Article 24.5 does not accord se lf-standing rights to trademarks, since it simply
limits the ability of GIs to prejudice trademarks. 85 The two examples presented by the EC in
paragraph 199 of their response to the panel's question confirm this interpretation, as they demonstrate

79 EC Responses to Questions following the Second Panel Meeting, para. 191.
80 EC Response to Panel Question 145, para. 197; US Response to Panel Question 145, note 42.
81 EC Responses to Panel Question 145, para. 198.
83 See US Opening Statement at Second Meeting, para. 94; US Second Written Submission,
paras. 171-173; US Response to Panel Question 78, paras. 107-113. The Appellate Body has interpreted
provisions based in part on their place in the overall stru cture of the covered agreemen t at issue, giving careful
consideration to the headings or titles of the sections in which the provisions appear. See Appellate Body
Report, Canada-Dairy, para 134 ("A strong presumption arises that the language which is inscribed in a
Member's Schedule under the heading, 'Other terms and Conditions', has some qualifying or limiting effect on
the substantive content or scope of the concession or commitment."); See also Appellate Body Report,
Definitive Safeguard Measures on Imports of Circular Welded Carbon Quality Line Pipe from Korea, paras. 80-
82, fn. 171; Appellate Body Report, US – Definitive Safeguards on Measures of Imports of Certain Steel
Products, paras. 337-338; Appellate Body Report, Argentina – Safeguard Measures on Footwear , para. 93;
Appellate Body Report, Korea – Definitive Safeguard Measure on Imports of Certain Dairy Products, para. 86.
84 EC Responses to Panel Question 145, para. 200.
85 US Opening Statement at Second Meeting, para. 95.

instances in which Article 24.5 limits the scope of GI protection vis-à-vis trademarks; they do not
demonstrate that Article 24.5 creates self-standing obligations with respect to trademarks.

132. The EC's examples also do not provide any clarity and, if anything, argue against the
proposition, put forward by the EC, that Article 24.5 "imposes self-standing [positive] obligations
with respect to the protection of trademarks" and therefore is not an "exception" to GI protection.
86
The EC presents a hypothetical in which a "Me mber's trademark law provides that a trademark
including or consisting of a geographic indication sha ll not be registered or, if registered, shall be
invalidated."87 They then state that while such a provision – if there were one – would go beyond
what is required by Article 22.3 and that the obligation not to invalidate such a trademark is only
found in Article 24.5. But Article 24.5 protects certain trademarks that might otherwise be prejudiced
in certain defined ways by "measures adopted to implement" Section 3 of Part II of the TRIPS
Agreement. Quite simply, the provision in a Memb er's trademark law postulated by the EC – to the
extent it exists in an any WTO Member – would no t appear to be a measure adopted to implement
Article 22.3 of the TRIPS Agreement. Further, that article requires more than mere identity of the
trademark and geographical indication – in particular it requires that the use of the indication in the
trademark be "of such a nature as to mislead the pub lic as to the true place of origin." Whether the
example put forward by the EC is otherwise consis tent with Article 15.2 of the TRIPS Agreement or
Articles 6quinquies, 9, 10, and 10 bis is another question. The point is that the EC's example is
simply irrelevant to the interpretation of Article 24.5.

133. Similarly, the second example offered by the EC
88 is irrelevant to the interpretation of
Article 24.5. The EC sets up an example that provi des for a prohibition of the use of a trademark that
is identical or similar to a subsequently recogn ized geographical indication in a manner that "goes
beyond the obligation found in Article 22.2." Again, it does not appear that the EC is hypothesizing a
measure "adopted to implement" Section 3 of Part II of the TRIPS Agreement within the meaning of
Article 24.5. Whether such a provision would be otherwise constrained by Article 15.2 or Articles
6quinquies, 9, 10, or 10 bis of the Paris Convention is not an issu e before this Panel, however. It is
sufficient to observe that the examples put forward by the EC have no basis in fact and are irrelevant
to the interpretation of Article 24.5.

134. Article 24.5, by its own terms, acts as a shield for covered trademarks against GIs, and
contains no provisions for limiting trademark rights. There is no rule that a provision that recognizes
one right, such as with respect to trademarks, cannot be an exception to a separ ate obligation, such as
with respect to GIs. To the contrary. Article 24. 8, for example, limits GI protection in light of a
person's right to use their own name, even though use of a person's name is not a form of intellectual
property protected elsewhere in the TRIPS Agreement; Article 24.8 would, in this sense, clearly offer
"additional protection" to the name that is not pr ovided elsewhere in the TRIPS Agreement. Such
protection, like the protection for trademarks illustrated in the examples presented in paragraph 199 of
the EC's response, "does not result" from any pr ovision of the TRIPS Agreement other than the
"exception" provision. The EC has now stated twic e that Article 24.8 is an exception (or "genuine"

86 EC Responses to Panel Question 145, para. 200.
87 The EC states that this is not a hypothetical ex ample, citing to Section 61 of Australia's Trademark
Act 1995. Once again, the EC creates a false impression by telling only part of the story. It is true that
Section 61(1) of Australia's Trade Marks Act 1995 provides that the "registration of a trade mark in respect of
particular goods ( relevant goods) may be opposed on the ground that the trade mark contains or consists of a
sign that is a geographical indication for goods ( designated goods) ... " What the EC fails to mention is that
Section 61, as its title clearly indicates, applie s to trademarks "containing or consisting of a false geographical
indication." Further, its specific terms limit its application to goods " originating in: (a) a country, or in a
region or locality in a country, other than the country in which the relevant goods orig inated; or (b) a region or
locality in the country in which the relevant goods originated other than the region or locality in which the
relevant goods originated."
88 EC Responses to Panel Question 145, para. 199.

exception) to GI protection, although in view of the fact that it appears to recognize a positive right,
the United States would not be surprised if the EC changed its mind on this point.

135. The EC also repeats its contention that Article 24.5 "defines in a comprehensive manner the
boundary" between GIs and trademarks.
89 The United States has already explained why this is
incorrect.90 While Article 24.5 does define a boundary between GIs and trademarks, it is not the only
boundary. By limiting the scope of GI protection vis-à-vis certain (but not all) trademarks,
Article 24.5 certainly constitutes one boundary. Ar ticle 17, the exception to the trademark section,
defines another boundary, by limiting the scope of tr ademark protection. The EC's understanding of
the role of Article 24.5 as a "comprehensive" bounda ry is inconsistent with the context of an
Agreement that includes separate exceptions for trademark protection and GI protection.91

Question 146

136. As a means of justifying the "co-existence" of prior registered trademarks with later, identical
or confusingly similar registered GIs, the EC repeats its assertion that the simultaneous exercise of the
two GI and trademark rights cited in the Panel's qu estion "would lead to a situation where neither the
trademark owner nor the right holders of the geographical indications could use the sign which is the
subject matter of their respective right."
92

137. Yet, later in its response, the EC acknowle dges that the "conflict" between the two individual
rights "is resolved by Article 22.3 (and 23.2), whic h provides for the invalidation of the trademark,
thereby effectively giving priority to the geographical indication."
93 Thus, it appears that the EC
concedes that there is no "conflict" between the ri ghts at issue (much less any conflict between the
obligations imposed on the EC by the relevant TRIPS provisions).

138. The United States is uncertain about the meani ng of the final sentence of the EC's response,
which reads as follows:

This "rule of conflict", however, does not apply to "grandfathered trademarks", as
defined in Article 24.5, which are subject to a different rule, as explained in the
response to the preceding question.
94
The United States simply observes, as it has previously, 95 that Article 24.5 includes, for example, a
requirement that trademarks subject to the Article 24.5 exception must be applied for, registered, or
acquired through use "in good faith." Further, th e exception in Article 24.5 prohibits prejudicing
certain trademarks "on the basis that such a tradem ark is identical with, or similar to, a geographical
indication."96 Finally, Article 24.5 applies only to "measures adopted to implement this Section."97

89 EC Responses to Panel Question 145, para. 201.
90 See, e.g., US Opening Statement at Second Meeting, para. 93.
91 See US Responses to Panel Question 78, paras. 107-113.
92 EC Responses to Questions following the Second Panel Meeting, para. 204. See also EC Second
Written Submission, para. 309.
93 EC Responses to Questions following the Second Panel Meeting, para. 206. In its own response to
question 146, the United States similarly stated that the "conflict" between the two rights would likely be
resolved, under TRIPS Article 22.3, by denying registration of the misleading trademark (or, if registered, by
making it subject to invalidity). US Responses to Questions following the Second Panel Meeting, paras. 78-81.
94 EC Responses to Questions following the Second Panel Meeting, para. 206.
95 US Responses to Questions following the Second Panel Meeting, para. 72 (note 41).
96 Moreover, for purposes of this dispute, the Un ited States' arguments are directed at those TRIPS
Article 16.1 rights associated with valid trademarks, and not with the effect of Regulation 2081/92 on
trademarks that are misleadi ng as to geographic origin. See US First Written Submission, para. 135 ("The

Question 147

139. The EC argues that the addition of the phrase "the right to use a trademark" during the
negotiating history of Article 24.5 reflects a "compr omise" that "grandfathered" trademarks should
not be accorded their Article 16.1 rights, but only th e right to affirmative use of the mark on labels,
advertising, etc. The United States has already expl ained in great detail, and will not repeat here, why
the EC's statement is incorrect and unsupported by an interpretation of the phrase "prejudice ... the
right to use a trademark" according to the customary rules of treaty interpretation.
98

140. By contrast, as the United States explained in its response to Question 147, the evolution of
Article 24.5 is entirely consistent with the sugges tion that the inclusion of language clarifying that
Article 24.5 applied only with respect to "measures adopted to implement [the GI] Section", was part
of the compromise arrived at in agreeing that Article 24.5 would be a mandatory provision.

Questions 148 and 149

141. It would be contrary to all of the evidence in this dispute to accept the EC's assertion that:

The assessment made by the EC authorities under Article 14(3) is analogous to the
assessment carried out by the EC trademark authorities in order to establish whether
the use of a later trademark will give rise to likelihood of conf usion with an earlier
trademark. When applying Article 14(3), the registering authorities, or the courts, as
applicable, must take into account all rele vant factors, including in particular the
similarity of goods and signs. As explained, length of use, reputation and renown are
mentioned expressly in Article 14(3) because geographical indications, when used as
trademarks, are primarily descriptive and non-distinctive.
99
142. The EC cannot simply substitute TRIPS-consis tent language that it wishes were included in
Article 14(3). The United States has presented compelling evidence of what Article 14(3) means, and
the EC has failed to rebut that evidence.

143. The EC's reading of Article 14(3) ignores the text of the provision. The plain text of the
provision requires denial of registration for a GI if it is "liable to mislead the consumer," and not if it
raises a "likelihood of confusion," which is the term used in TRIPS Article 16.1. Equating the "liable
to mislead" standard with the "likelihood of c onfusion" standard in Article 16.1, would not be
consistent with this evidence, be cause it ignores the distinct use of those two standards elsewhere in
EC law.
100

United States is not arguing that trademarks that 'mislead the public as to the true place of origin' of the
underlying goods in a given territory must be registered and provided Article 16.1 rights in that territory.").
97 Any other measures must, of course, be otherwise consistent with the TRIPS Agreement and the
Paris Convention.
98 See, e.g. , US Responses to Panel Question 145, para. 76; US Second Written Submission,
paras. 176-181; US Response to Panel Question 76, para. 102.
99 EC Responses to Questions following the Second Panel Meeting, para. 215.
100 The EC Trademark Regulation and Trademark Direc tive differentiate between the two standards.
Article 50.1(c) of the Trademark Regulation and Article 12.2(b) of the Trademark Directive provide for
revocation of a trademark where it is "lia ble to mislead the public, particularly as to ... geographical origin . . ."
Regulation No 40/94, Article 50.1(c), Exhibit COMP-7 ; Directive 89/104/EEC, Article 12.2(b), Exhibit
COMP-6.In contrast, Article 9.1(b) of the Trademark Regulation and Article 5.1(b) of the Trademark Directive
grant trademark owners the exclusive right to prevent use of a similar or identical sign for similar or identical
goods where "there exists a likelihood of confusion on the part of the public." Regulation No 40/94,
Article 9.1(b), Exhibit COMP-7; Directive 89/104/EEC, Article 5.1(b), Exhibit COMP-6.

144. The EC's reading also ignores the limited sc ope of Article 14(3), whic h is by its own terms
relevant only when a trademark enjoys reputation, renown and use. The EC's reading represents a
complete departure from what it has termed "highly relevant" 101 guidance offered by the Commission
on the meaning of Article 14(3) outside the bounds of this dispute, as recently as August 2004. The
Commission's Guide to Regulation 2081/92 states, in unequivocal terms, that "only in one
circumstance" – when the trademark enjoys re putation, renown and use – will the EC apply
Article 14(3) to deny registration of a similar or identical GI.102 "In all other cases," the EC applies its
"general rule," which is that the GI is registered , "notwithstanding the existence of the registered
trademark."103

145. The EC's reading of Article 14(3) is al so irreconcilable with the way in which the
prerequisites included in Article 14(3) – reputation, renown and use – have been interpreted by WIPO
and the Paris Union, as well as by the ECJ and OHIM.104 Each of these entities has attached particular
significance to these terms, as prerequisites for th e heightened protection extended to well-known or
famous marks.

146. The EC's reading is, in addition, contrary to the understanding of Article 14(3) expressed by
EC member States, which consider that the provision speaks to "well-known mark[s]."
105

147. Finally, the EC's reading is also contrary to the EC Trademark Regulation and Trademark
Directive, which refer to "reputation" solely as a pr erequisite for the heightened protection associated
with well-known marks.
106

148. For all of these reasons, Article 14(3) do es not even enable the EC authorities to deny
registration of any GI that is identical or confusi ngly similar to any prior valid registered trademark –
much less provide the right to trademark owners to en join confusing uses of such GIs, if registered.
Article 14(3) is not an adequate substitute for TRIPS Article 16.1 rights.

149. Nor do Articles 7(4) and 7(5)(b) of the EC GI Regulation transform Article 14(3) into an
adequate substitute for TRIPS Article 16.1 At pa ragraph 222 of its response, the EC repeats its
assertion that Articles 7(4) and 7(5)(b) modify the meaning of Article 14(3), requiring the EC to deny
registration of not just GIs that are "liable to mislead," as Article 14(3) reads, but also GIs that raise a
"likelihood of confusion" with respect to all trademarks (not just those of reputation, renown and use).
Articles 7(4) and 7(5)(b) simply do not do this.

150. As the United States has previously noted,
107 even if Articles 7(4) and 7(5)(b) augment
Article 14(3) and change the "liable to mislead" standard to a "likelihood of confusion" standard, 108
that standard would still apply only to trademarks that enjoy reputation, renown and use. To conclude
otherwise would be to read the words "reputation and renown and length of time it has been used" out

101 EC Responses to Questions following the Second Panel Meeting, para. 8.
102 Guide to Community Regulations, "Protection of Geographical Indications, Designations of Origin
and Certificates of Specifi c Character for Agricultural Products and Foodstuffs" (Working Document of the
Commission Services issued by the European Commission Directorate-General for Agriculture, August 2004),
pg. 24. Exhibit EC-64.
103 Id.
104 US Second Written Submission, paras. 147, 150-152.
105 US Second Written Submission, paras. 148-149. See also US Responses to Questions following the
107 US Second Written Submission, paras. 160-164.
108 The United States does not understand precisely how Article 7(4) does this, since it does not even
refer to "likelihood of confusion."

of Article 14(3). We have also noted that even if Article 7(5)(b) somehow turns the "liable to
mislead" standard from Article 14(3) into a "like lihood of confusion" standard, Article 7(5)(b) only
applies, by its own express terms, in situations in which the EC member States have been unable to
reach agreement on whether to grant an objection ma de by, for example, a trademark owner. If the
member States agree on whether to grant th e trademark owner's objection (pursuant to
Article 7(5)(a)), it is unclear how Article 7(5)(b) c ould have any relevance to Article 14(3), let alone
modify it to include a "likelihood of confusion" standard. In those situations, trademark owners
affected by Article 14(3) would still face the "liable to mislead" standard (and, of course, would only
benefit if their trademarks enjoyed reputation, renow n and use); Article 14(3) would not substitute for
TRIPS Article 16.1 for all of these trademark owners.

151. The United States also recalls that Article 7(4) is a provision that states under what
circumstances an objection raised by a trademark owner should be admitted.
109 One ground is
whether the GI would "prejudice the existence of ... a mark." The EC has argued that this must serve
as grounds not only for admitting an objection, bu t also for granting the objection and denying
registration of the GI with respect to all trademarks , because otherwise, there would be no point in
admitting the objection in the first place. The United States does not find it at all unusual, however, to
admit more objections than will ultimately be successful. The EC's view, in fact, implies that unless
every
 objection that is admitted is successful, w ith the GI registration denied in every case in which
an objection arises and is admitted, Article 7(4) w ill have no meaning. This is not necessary to give
Article 7(4) meaning. The United States notes the expr ess statement by the ECJ that "the fact that an
objection is admissible under [Artic le 7(4)] does not prevent the registration applied for from being
finally granted."110

152. It is also important to note that the EC 's assertion that reputation, renown and use are
"relevant in all cases" involving an evaluation against the "likelihood of confusion" standard is plain
and simply untrue.
111 In lengthy string cites included as f ootnotes 74-77 of its response to question
148, the United States offered many decisions in wh ich OHIM, the CFI and EC member State courts
found a likelihood of confusion, without addressing whether the prior trademark at issue enjoyed
reputation, renown and use. In some of those cases, OHIM, the CFI and the EC member State courts
expressly held that the prior trademark for which a likelihood of confusion was found did not enjoy
reputation, renown and/or use – a fact that would have precluded the EC from stopping the
registration of a confusing GI under Article 14(3) of the GI Regulation. While reputation, renown and
use might be relevant in some cases, e.g., where the prior trademark a nd the allegedly infringing sign
are somewhat less similar, OHIM and the courts routinely find a lik elihood of confusion without the
trademark owner having established that the tr ademark enjoys reputation, renown or use . In other
words, establishing reputation, renown and use are not, as the EC asserts, merely part of the EC
authorities' inquiry, under Article 14(3), into whether the GI rises a likelihood of confusion with
respect to a prior, identical or similar mark.

153. Nor is it true, as the EC implies at paragraphs 210 -214, that reputation, renown, and use are
always part of the "likelihood of confusion" anal ysis of other WTO Members. Of course, WTO

110 Case C-289/96, Kingdom of Denmark, Federal Republic of Germany and French Republic v
Commission, [1999] ECR I-1541, para. 93. Available at http://europa.eu.int/jurisp/cgi-bin/form.pl?lang=en.
Moreover, in that case, the ECJ was reviewing claims that a GI was generic, under the factors in Article 3(1) of
the EC GI Regulation, and therefore not registrable. Ar ticle 3(1), unlike Article 14(3 ), specifically directs the
Commission to take into account "the relevant nationa l or Community laws," wh ich the ECJ found included
Article 7(4) of the GI Regulation itself. Id., paras. 95, 102. Article 14(3) does not include any such
requirement, and it is not therefore clear why Article 7(4) should be considered at all to modify the meaning and
application of Article 14(3).
111 EC Responses to Questions following the Second Panel Meeting, para. 219.

Member practices are irrelevant to a review of the WTO-consistency of the measure at issue in this
dispute. Even so, however, it is plain from the EC's own quotations from the laws of other WTO
Members that reputation, renown, and use are amo ng the factors that might come into play in a
"likelihood of confusion" analysis by various WTO Members. But not even in the materials cited by
the EC are their presence required to find a likelihood of confusion. This is in stark contrast to
Article 14(3) of the GI Regulation.

154. As it argued previously in this dispute,
112 the EC again argues that trademarks containing or
consisting of geographical elements lack distinctiveness and are as such not registrable. 113 The EC
states that those trademarks should be registered only if they have acquired distinctiveness through
use.114 The EC reasons that since trademarks contai ning or consisting of geogr aphical elements will
be registered only if they have acquired distinctiveness through use, consumers are unlikely to
confuse such a trademark with an identical or similar GI unless the trademark has been used. 115 The
EC's implication appears to be that it is entirely appropriate, under Article 16. 1, for Article 14(3) to
limit denial of registration for a GI to situations in which an identical or similar prior trademark has
been used.

155. The EC's analysis is wrong. As the Panel will recall, the United States has offered several
examples of registered Community Trademarks that contain or consist entirely of geographical place
names.
116 In fact, the Community Trademark registrations for each of these trademarks expressly
state that there was no showing of acquired distinctiveness through use.

156. Moreover, the United States has in fact provided a decision in which a court found a
likelihood of confusion in the very s ituation envisioned by the EC. In the Fläminger case, the
German Federal Supreme Court upheld a decision to block registration of the term FLÄMINGER as
part of a word/device mark, on the basis that it was confusingly similar to a prior trademark,
FÄLINGER. The court so held, despite the fact that the word Fläminger referred to the Eastern
German region of Fläming, and even though the pr ior trademark was a "fanciful" name, enjoyed no
reputation and had not achieved acquired distinctiveness through use.
117

157. Finally, paragraph 220 of the EC's respon se illustrates with remarkable clarity why
Article 14(3) is an inadequate substitute for TRI PS Article 16.1. In the EC's hypothetical, the EC
states that where a prior trademark AUSTRALIA for wine has not been used, the public would not be
misled and, therefore, if applied for, the GI "Australia" would presumabl y be registered. Under
Article 16.1, likelihood of confusion would be presumed in this case, given that the later sign is
identical and is to be used on identical goods. Under Article 14(3), however, the GI would be
registered nonetheless. If Article 14(3) is to serve as an adequate substitute for TRIPS Article 16.1, it
must, at the very least, lead to denial of registratio n of the GI in this situation. The EC's admission
that the GI would be registered is a clear indicati on that Article 14(3) does not serve as an adequate
substitute for Article 16(1).

112 See EC First Written Submission, paras. 275, 278-285; EC Responses to Questions following First
Panel Meeting, para. 176.
113 EC Responses to Questions following the Second Panel Meeting, para. 219.
114 Id.
115 Id.
116 US Responses to Questions following the First Panel Meeting, para. 79 (and Exhibit US-46); US
Second Written Submission, para. 169; US Oral Statement at Second Panel Meeting, para. 74 (and Exhibits
US-74 through US-76). The registrations in the cited exhibits include a field entitled "Acquired distinctiveness"
(which is followed by "No" in each of the examples provided).
117 Judgment of the German Federal Supreme Court, Fläminger, 28 May 1998, GRUR 1998,
pgs. 930-932. Exhibit US-92.

Question 151

158. The EC states that if Article 24.3 is consid ered to be an exception to the exception provisions
in Article 24, then "Members could not rely upon Article 24.5 as a 'justification' to diminish the
[p]re-existing protection of geographical indications."
118 It is not clear, however, how Article 24.5
would lead to diminishing of the protection of individual GIs protected under the EC GI Regulation
that existed prior to entry into force of WTO Ag reement, since it only protects certain trademarks
from prejudice arising from measures adopted to implement the GI section of the TRIPS Agreement.
The United States notes that there were no GIs protected under the EC GI Regulation prior to
January 1, 1995. Moreover, as the United States has explained, Article 24.3 does not establish
limitations on what Members must do in implementi ng other sections of the TRIPS Agreement - such
as in the trademark and copyright sections.
119

Question 152

159. The EC's failure to answer the Panel's direct question is significant. The Panel's question
derives from the fact that TRIPS Article 24.3 prevents diminishment of protection for GIs that could
be caused by "implementing this Section", referri ng to Part II, Section 3 of the TRIPS Agreement.
120
It follows that any diminishing of GI protection that could arise by virtue of implementation of
another section of the TRIPS Agreement, including the trademark section, is not prohibited by
Article 24.3.

160. The EC's response that "[o]n the complain ants' own interpretation of Article 24.5, the
obligation to diminish protection would arise from the obligation imposed by Article 24.5 and not
from Article 16.1", is simply wrong, and an attemp t to avoid answering a direct and important
question from the Panel. If the ma intenance of GI protection violates the exclusive rights of owners
of prior valid trademarks to prevent all others from using signs that result in a likelihood of confusion,
then this constitutes a breach of Article 16.1 of th e TRIPS Agreement. (The EC in fact acknowledges
that under the EC GI Regulation, "a trademark owner cannot prevent the holder of a registered
geographical indication from using the name or names registered under Regulation 2081/92 on the
grounds that the use of such name or names is confusing per se with an earlier trademark."
121)

161. Indeed, the United States emphasizes, once agai n, that it has not made an affirmative claim
against the EC GI Regulation based on TRIPS Article 24.5. The US claim is, and always has been,
based on a violation of TRIPS Article 16.1. It is th e EC that has raised TRIPS Article 24.5 in its own
defense.
122 Thus, the United States does not understand how , at this point in the proceedings, the EC
could be under the erroneous impression that "[o]n the complainants' own interpretation of
Article 24.5, the obligation to diminish protec tion would arise from the obligation imposed by
Article 24.5 and not from Article 16.1."

Question 153

162. The United States has explained on numer ous occasions why the blanket exception to
trademark rights in Article 14(2) of the GI Regul ation is not a "limited exception" and does not take
into account the interests of anyone other than pr oducers of certain agricultural products in the EC
who have rights to use a registered GI. Instead, fo r a given trademark, Article 14(2) allows for an

118 EC Response to Panel Question 151, para. 228.
120 See US Opening Statement at Second Meeting, para. 96; US Second Written Submission,
paras. 188-190.
122 See US Response to Question 75, para. 91.

unlimited number of users of registered GIs to cr eate an unlimited degree of likelihood of confusion
with respect to the trademark, and to do so for an unlimited period of time. 123 Under the EC's
interpretation of TRIPS Article 17, all uses of a registered GI are automatically entitled to the "fair
use" exception, no matter what the facts of the particular case at hand ( i.e., whether the use is fair, the
term is descriptive, or the legitimate interests of the particular trademark owner are considered), by
simple virtue of registration alone.

163. While the national trademark laws cited by the EC all allow descriptive uses that might
otherwise infringe a trademark, such uses are subjec t to the proviso that they be in accordance with
honest practice in industrial or commercial matters or consistent with fair pr actice. A determination
as to whether such a proviso is met under trademark law requires a case-by-case analysis to determine
if a particular use is "fair" in accordance with national law and within the meaning of TRIPS
Article 17. In contrast, the EC provides for a bl anket, limitless exception to trademark rights through
operation of Article 14(2) of the EC GI Regulation.

164. In its response to Question 153, the EC again atte mpts to justify its treatment of trademarks as
permissible under TRIPS Article 17. First, the EC states that the exce ption created by the GI
Regulation is "limited" because the trademark owner "retains the right to prevent the use of the name
by any person in relation to any goods which originate in a different geographical area or which do
not comply with the specifications."
124 As the United States has expl ained, whether the trademark
owner retains the right to prevent parties that ar e not rightholders in registered GIs from confusing
uses of similar or identical signs does not change th e fact that the trademark owner has already been
subject to an unlimited exception, especially when considered the potential detrimental effect on the
trademark rights.125

165. The EC states that the potential uses of GIs permitted by the GI Regulation are "narrower than
the potential universe of uses of other descriptive terms, such as indications of source", and that this
consideration is important because "Australia and th e United States appear to concede that the use of
those terms would qualify for an exception under Article 17."
126 With this statement, the EC now
reads the word "fair" out of th e phrase "fair use of descriptive terms". The United States has never
stated or "conceded" that any use of descriptive terms would qualify for an exception under
Article 17. Pursuant to the terms of Article 17, only fair use of descriptive terms is permitted.

166. Now, considering that the EC also reads "d escriptive terms" in a way that fails to give
meaning to "descriptive"127, it is apparent that the EC is reading Article 17 to allow the "use of terms",
regardless of the type of use or the type of term , and regardless of the ef fect on trademark owners,
despite the fact that Article 17 speaks to "fair use of descriptive terms", requires that the exceptions be
"limited", and further requires that the trademark owner's legitimate interests be taken into account.

167. Next, the EC disputes that Article 17 requires that an exception to trademark rights
"minimizes" the "likelihood of confusion."
128 The EC argues that a requirement to minimize the
likelihood of confusion would lead to a situation where the interests of third parties would not be
taken into account, or otherwise balanced with the inte rests of the trademark owner. This is incorrect.
By permitting a limited exception in the first place, the legitimate interests of third parties are already
being taken into account. In other words, if there were no legitimate third party interests militating in
favor of allowing an exception to trademark rights, then no such exception would be permitted. After

123 See, e.g., US Opening Statement at Second Panel Meeting, para. 100.
125 US Opening Statement at Second Panel Meeting, para. 101.
127 US Opening Statement at Second Meeting, para. 103.

all, it is certainly not in the legitimate interests of the trademark owner to agree to an exception to his
right. Once it has been determined that an exception is appropri ate because it takes into account
certain third party interests, then the remainder of Article 17 demonstrates that the exception must be
limited, including through th e specific reference to " limited exceptions", the requirement to take
account of the legitimate interests of the tr ademark owner, and the example requiring " fair use of
descriptive terms." Given that the core trademark ri ght is provided in Article 16.1, a "limited"
exception refers to an exception that results in a limited degree of likelihood of confusion with respect
to the trademark. As detailed previously, "lim ited exception" refers to "a narrow exception – one
which makes only a small diminution of the rights", where "limited" is "measured by the extent to
which the exclusive rights" of a trademark have been curtailed.
129

168. The EC also tries to minimize the effect of Article 14(2) of the GI Regulation on trademarks
by stating that, even under the reading of the Unite d States, Article 14(3) prevents registration for
certain GIs that are misleading with respect to a certain category of trademarks ( i.e., those that enjoy
reputation, renown and use).
130 The United States has explained, however, that this does not qualify
as a "limited" exception within the meaning of Article 17. Article 17 permits "limited exceptions to
the rights conferred by a trademark", not unlimited exceptions to the rights of a limited number of
trademarks, as the EC's interpretation suggests.131

169. The EC again raises its labeling and misl eading advertising laws, as well as member State
unfair competition laws, as evidence that the ex ception to Article 16.1 rights is "limited".
132 A s a
threshold matter, national laws in the EC govern ing labeling, misleading advertising, and unfair
competition, cannot prevent the use of a geographical indication registered under the GI Regulation.
Under the principle of the superiority of EC law, a national court would not have the authority to stop
the use of a right granted by Regulation 2081/92 based on national law.

170. Further, even if applicable, the United States has explained that such laws do not even pretend
to consider the interests of trademark owne rs in the manner require d by TRIPS Article 17.
133 These
laws have nothing to do with the right of tradem ark owners to defend their mark from infringement
within the meaning of TRIPS Article 16.1. The fact that certain acts that constitute trademark
infringement may also, coincidentally, be subject to prohibition under other EC or member State
legislation is simply not relevant to a determina tion whether the infringement of a given trademark by
a given use constitutes a limited exception to the rights of a given trademark owner.

171. In fact, if the EC's argument were to be accepted, then a Member could simply ignore the
obligations of the trademark section of the TRIPS Ag reement in their entirety, and instead argue that
implementation of Article 10 bis of the Paris Convention, alone, sa tisfies the obligations of TRIPS
Article 16.1, when read in conjuncti on with TRIPS Article 17. Article 10 bis requires countries of the
Paris Union to provide, for example, "effective protection against unfair competition", defined as
"[a]ny act of competition contrary to honest practices in industrial or commercial matters." While it is
true that a number of the exceptions to tradem ark laws cited by the EC, including the EC's own
Trademark Directive and Regulation, similarly re quire that such exceptio ns accord with "honest
practices in industrial or commercial matters", they all do so in the context of trademark law. By
contrast, EC misleading advertising and labeling laws, and Member state unfair competition laws, are
entirely disconnected from the protection of individual trademark rights. Recourse to such laws is

129 US Response to Panel Question 154, para. 119; US Opening Statement at Second Meeting,
para. 100, quoting Panel Report, Canada – Patent Protection, paras. 7.30-7.31.
131 US Opening Statement at Second Meeting, para. 102; US Second Written Submission,
paras. 208-209.
132 EC Response to Question 153, paras. 235-239.

available to anyone, regardless of whether they are ow ners of registered trademarks. Again, while the
substantive standards of the EC misleading adve rtising and member State unfair competition laws
may, perhaps, be consistent w ith the requirements of Article 10 bis of the Paris Convention, they do
not satisfy the specific obligations of the trademark section of the TRIPS Agreement. Thus, the EC's
arguments, more than just ignoring "fair" in the phrase "fair use", or "limited" in the phrase "limited
exceptions", now seem to replace the entire trad emark section of the TRIPS Agreement with
Article 10bis of the Paris Convention to justify any and all harm to trademark rights imposed by the
GI Regulation. This is not permitted, for it does not "give effect to the provisions of [the TRIPS]
Agreement", as required by TRIPS Article 1.1, and treats an entire section of the TRIPS Agreement as
being redundant with the Paris Convention.
134

172. Moreover, the generalized unfair competition la ws and misleading advertising laws cited by
the EC are not somehow "equivalent to" the requi rements generally stipulated in the exceptions
provided in the trademark law of many Members, because the EC measures, unlike the exceptions to
trademark law, are entirely disconnected fro m the confines of trademark law, itself. 135 For example,
in a typical trademark infringement case, the trad emark owner has the burden to demonstrate that a
certain use causes a likelihood of confusion (or, altern atively, that the presumption for identical signs
for identical goods is appropriate). Once the trademark owner presents a prima facie case of
infringement, the burden shifts to the accused infringer to demonstrate that such use is justified by a
limited exception, such as fair use. By contr ast, when a registered trademark owner brings a
trademark infringement case against the likely confusing use of a registered GI in the EC, the user of
the registered GI can stop the proceedings before the court even begins to consider likelihood of
confusion by simply showing, at the outset of the proceedings, that the GI is registered and used
pursuant to the GI Regulation. In such a situati on, it would be useless for the trademark owner to
demonstrate trademark infringement, because, as the EC has confirmed, pursuant to the GI
Regulation, "a trademark owner cannot prevent th e holder of a registered geographical indication
from using the name or names registered under Re gulation 2081/92 on the grounds that the use of
such name or names is confusing per se with an earlier trademark."
136 Thus, during the course of
trademark infringement proceedings, the GI user neve r has the burden to show, for example, that use
of the GI constitutes "fair use" or qualifies as a limi ted exception. Once the GI user shows that the GI
is registered, the trademark owner automatically loses, even if it can demonstrate infringement.

173. In fact, rather than placing the burden on th e GI rightholder to prove its entitlement to a
limited exception under Article 17, the EC w ould place the burden on the trademark owner to
demonstrate that a particular use of the registered GI is not limited, or does not take account of the
legitimate interests of the trademark owner, in th e sense that the use violates member State unfair
competition laws, or EC labeling and misleading advertising laws. As described above, this is at odds
with the course of trademark infringement proceedings in a system where the exceptions to trademark
law are connected to the trademark law, itself, and it is also at odds with the TRIPS Agreement.

174. Under the EC's reasoning, after the trademark infringement case is dismissed based simply on
the fact that the allegedly infringing use is that of a registered GI, the trademark owner would then
have to bring a separate claim or case against us e of the GI for misleading advertising or unfair

134 See Panel Report, India – Patents , WT/DS50/R, para. 7.53 ("The TRIPS Agreement is different
from other covered agreements in that most of its pr ovisions require Members to take positive action ... In
situations where it is necessary for a Member to give effect to such pos itive action, a failure to provide the
executive with the required authority constitu tes a breach of the Agreement ... ."). See also Appellate Body
Report, Canada-Dairy, para. 133 ("[T]he task of the treaty interpreter is to ascertain and give effect to a legally
operative meaning for the terms of the treaty. The applicable fundamental principle of effet utile is that a treaty
interpreter is not free to adopt a meaning that would reduce parts of a treaty to redundancy or inutility.")
135 EC Response to Question 153, paras. 240-241.

competition. But the ability to bring such a case does not satisfy the requirements of TRIPS
Articles 16 and 17, as it does not accord any rights specifically to the trademark owner. To this effect,
the obligation in TRIPS Article 42 for Members to "make available to right holders civil judicial
procedures concerning the enforcement of any intellectual property right covered by this Agreement "
provides relevant context.
137 Recourse to misleading advertising law, or unfair competition law,
simply does not "concern[ ] the enforcement of . . ." , trademark rights. It concerns something entirely
different, namely the enforcement of Article 10 bis of the Paris Convention. Moreover, TRIPS
Article 44.1 relates to injunctions for "infringement of an intellectual property right", while TRIPS
Article 45.1 speaks to "the authority to order the infringer to pay the right holder damages adequate to
compensate for the injury the right holder has suffe red because of an infringement of that person's
intellectual property rights." 138 By contrast, a claim pursuant to EC misleading advertising laws or
Member state unfair competition laws does not relate to "infringers" or "right holders".

Questions 154 and 156

175. The EC begins with the surprising assertion th at "[a] trademark which has never been used or
which is virtually unknown ... could be easily re placed without significant prejudice to the owner."
139
The EC's belief that a trademark owner would not suffer "significant prejudice" if the owner of a
"virtually unknown" trademark were forced to re place his trademark reflects the EC's complete
disregard for certain classes of trademarks a nd a fundamental misunderstanding of the commercial
realities confronting trademark registrants and users. A company will make significant investments in
the creation of a trademark and in the development of the product and its adve rtising prior to product
launch – that is prior to it being known in the mark et. Such investments can be considerable – in
particular for small and medium sized enterprises that develop a local market in one EC Member State
and seek protection for the trademark and devel op the markets (and knowledge of the trademark
among consumers) subsequently in other EC Member States. For the EC to say that a trademark
under such circumstances "could be easily replaced" e xhibits an utter lack of understanding of how
products and services are developed and brought to ma rket in Europe, and the role that trademarks
play in that complex and costly endeavor. While the EC's understanding may be consistent with the
treatment that the GI Regulation accords registered tr ademarks, it is not consistent with the treatment
accorded trademarks under the TRIPS Agreement.

176. As the United States has explained previous ly, TRIPS Article 17 states that Members may
provide "limited exceptions to the rights conferred by a trademark ." It does not allow unlimited
exceptions to a certain class of trademarks, even fo r trademarks that the EC considers "virtually
unknown". What the EC might consider "unknown" trademarks are accord ed the same protection
under Article 16.1 as trademarks that the EC would c onsider "known"; similarly, they are granted the
same treatment under Article 17 as trademarks that are known.

177. The EC's limited view of trademark right s is emphasized by its implication, at
paragraphs 246-247, that a trademar k owner does not have a legitimate interest that is reflected in
Articles 15.1 and 16.1 of the TRIPS Agreement – a le gitimate interest in preventing competitors from
inducing consumers to buy competing products based not on the quality of the competing product, but
instead on the mistaken belief that they are buying the product associated with the trademark. While
it may be true that "legitimate interest" does not coincide exactly with "legal interest" – as the panel in
Canada – Pharmaceutical Patents noted, third parties may have a legitimate interest without having a
legal interest under the TRIPS Agreement
140– the trademark owner's legitimate interest in preventing

137 Emphasis added; footnote omitted.
138 Emphasis added.
140 Panel Report, Canada – Pharmaceutical Patents, para. 7.68.

others from using identical or similar signs in a manner that results in a likelihood of confusion is
undeniable.

178. Consistent with the US response to Panel Qu estion 154, however, the EC correctly identifies
two categories of third parties with relevant le gitimate interests – namely, producers who aim to
provide information to consumers about the geogra phical origin of the product, and consumers who
benefit from such information.
141 The EC suggests, in paragraph 251 of its response to Panel
Question 154, several factors that may be considered in determining whether a degree of likelihood of
confusion may be appropriate, such as instance s "where the geographical indication enjoys more
recognition than the trademark."142 Yet, the unlimited exception to trademark rights created by the GI
Regulation does not allow for any such considera tions of individual geographical indications or
trademarks. Instead, it provides a blanket exception to trademark rights, and allows for an unlimited
degree of confusion, over an unlimited period of ti me, with respect to an unlimited number of GI
users, based on the simple fact that the use is of a registered GI. Consideration of whether a
"geographical indication enjoys more recognition than the trademark", just as any other individualized
consideration, plays no part in this blanket exception.

179. In reviewing the terms of Article 17, the EC states that "all that is required by Article 17 is
that Members 'take account of' the different interests at issue", including those of the trademark owner
and third parties.
143 Of course, this is not "all that is required by Article 17." Before reaching the
analysis of whether the "legitimate interests" ar e taken into account, it must first be determined,
pursuant to Article 17, that the exception is "limited. " This is a distinct requirement. As detailed
previously, "limited exception" refers to "a narrow exception – one which makes only a small
diminution of the rights", where "limited", is "measu red by the extent to which the exclusive rights"
of a trademark have been curtailed. 144 Thus, the EC errs when it states that "Article 17 puts on an
equal level all the interests involved."145

180. The EC presents, in paragraph 253 of its res ponse to Panel Question 154, a list of reasons why
it apparently believes that GIs are superior to trad emarks -- reasons that have absolutely no basis in
the TRIPS Agreement but that may explain some of the motivations behind the EC's breaches of
TRIPS Article 16. For example, the EC implies that GIs are superior to trademarks because they
"serve a public interest", as opposed to trademar ks, which they allege have only "a commercial
function."
146 Yet, the TRIPS Agreement, itself, demonstrates that trademarks do, in fact, serve a
public interest by providing consumers with valuab le information and allowing them to "distinguish[]
the goods or services of one undertaking from those of other undertakings", without a likelihood of
confusion.147 Indeed, as the United States pointed out in its first written submission, 148 EC
jurisprudence recognizes the important public interest role that exclusive protection for trademarks
plays. In this respect, Advocate General Jacobs of the European Court of Justice stated in the Hag-II
case, that:

A trademark can only fulfil that role if it is exclusive. Once the proprietor is forced to
share the mark with the competitor, he loses control over the goodwill associated with
the mark. The reputation of his own goods will be harmed if the competitor sells

142 EC Response to Question 154.
144 US Response to Panel Question 154, para. 119; US Opening Statement at Second Meeting, para.
100, quoting Panel Report, Canada – Patent Protection, paras. 7.30-7.31.
147 TRIPS Articles 15.1 and 16.1.

inferior goods. From the consumer's point of view, equally undesirable consequences
will ensue, because the clarity of the si gnal transmitted by the trademark will be
impaired. The consumer will be confused and misled.
149
181. The United States has already set forth, in its own detailed response to Panel question 156, the
underlying reasons for the differences in the lan guage of the various exceptions to intellectual
property protection in the TRIPS Agreement.

182. With respect to the EC's contention that "it is beyond dispute that the requirements of
Article 17 are substantially less stringent th an those of [TRIPS Articles 13, 26.2 and 30]",
150 the
United States would like to reiterate that such a conclusion stems from an incorrect reading of
Article 17. In particular, contrary to the EC's interpretation, the United States has explained that
Article 17 makes no reference to "normal exploitati on" of a trademark because a trademark right ( i.e.,
the exclusive right to prevent uses of signs that cause a likelihood of confusion with respect to a
trademark) is simply not subject to exploitation in the same sense as the "exploitation" of a
copyrighted work, protected industrial design, or patented invention.
151 Unlike in other intellectual
property areas, therefore, Article 17 does not pe rmit exceptions that would conflict with any
exploitation of the trademark – normal or not – and does not permit reasonable conflicts with a
"normal exploitation", because any conflict with the trademark rights goes to the heart of the
trademark owner's legitimate interest. Therefore, there is no need for Article 17 to provide for
exceptions that conflict with an "exploitation" of the trademark.

183. Likewise, Article 17 does not include the la nguage regarding "unreasonabl[e] prejudice [to]
the legitimate interests of the" intellectual property right holder referred to in other exceptions because
of the fundamental differences in the intellectual pr operty rights concerned. By contrast to patents
and copyrights, where one can point to exampl es in which certain limited exceptions do not
unreasonably prejudice the legitimate interests of the right holder, the very ability of a trademark
owner to distinguish goods using his trademark is significantly compromised if that trademark owner
cannot stop confusing uses of his signs.
152 As a result, the standard of "unreasonably prejudice" the
rights of the owner is not included, because any u ses of signs likely to cause confusion with a mark
will prejudice the owner's interests. Thus, th e absence of such language certainly does not
demonstrate that Article 17 is "substantially less stringent" than that of other exceptions to TRIPS
obligations.

Questions 159-160

184. Contrary to the EC's argument, the United States is not arguing that the GI Regulation
excludes the application of other measures to designations of origin and geographical indications.
The United States detailed its arguments at paragra phs 171-183 of its first written submission. For
instance, Article 2(1) of the EC GI Regulation provides that the GI Regulation is the means of
achieving "Community protection" of GIs, but fails to provide legal means under that Regulation to
all interested parties. Further, and perhaps more significant, by not permitting all interested persons to
object to a GI registration, the GI Regulation fails to provide the legal means to those persons to
prevent misleading uses vis-a-vis the registered GI . The EC has suggested that other laws are
available to protect GIs in the EC, but has not s hown that these other laws overcome the deficiencies
on the face of the GI Regulation, particularly k eeping in mind that EC regulations take precedence
over EC member State laws.

149 Case C-10/89 SA CNL-Sucal NV v. HAG GFAG, opinion delivered on 13 March 1990, European
151 US Response to Panel Question 156, para. 129.
152 US Response to Panel Question 156, para. 130.

Question 164

185. The United States agrees with the EC that TRI PS Article 7 seems to be of limited relevance to
this dispute, as it relates to the role of TRIPS rules in promoting technological innovation and
technology transfer.
153

186. The EC asserts that the EC GI Regulation is a measure that promotes the public interest in a
sector of vital importance to the EC's socio-econom ic and technological development, within the
meaning of TRIPS Article 8.1. The EC has not demonstrated, however, that requiring prior valid
registered trademarks to "coexist" with later regist ered GIs – by depriving trademark owners of their
Article 16.1 rights – is "necessary" to promote this public interest, as required by Article 8.1. In any
event, the EC can maintain this "coexistence" onl y to the extent that it is "consistent with the
provisions of" the TRIPS Agreement, within the m eaning of Article 8.1. As the United States has
shown, however, this is an impossible task fo r the EC, since "coexistence" is fundamentally
inconsistent with TRIPS Article 16.1.

153 EC Responses to Questions following the Second Panel Meeting, para. 273.

ANNEX A-10

COMMENTS OF THE UNITED STATES ON THE REPLY
OF THE INTERNATIONAL BUREAU OF WIPO
TO THE PANEL'S LETTER OF 9 JULY 2004

(28 September 2004)

1. As provided in item 3(k) of the Panel's "Further Revised Timetable for Panel Proceedings",
the United States is providing comments below on the reply of the World Intellectual Property
Organization ("WIPO") to the Panel's letter of Ju ly 9, requesting available factual information
relevant to the interpretation of certain provisions of the Paris Convention (in particular, Article 2,
related to national treatment).

2. The factual information provided by WIPO cons ists of excerpts from WIPO's official records
of various diplomatic conferences that adopted, amen ded, or revised provisions currently contained in
Articles 2 and 3 of the Paris Convention (Stockholm Act, 1967). As a preliminary matter, the United
States notes that, under customary rules of interpreta tion of international public law, reflected in
Article 31 of the Vienna Convention on the Law of Treaties , a treaty must be interpreted in good faith
in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in
the light of its object and purpose. Throughout th is dispute, the United States has applied this
approach to interpreting the TRIPS Agreement and Paris Convention provisions at issue in this
dispute. Supplemental means of interpretation, in cluding the preparatory work of the treaty and the
circumstances of its conclusion, may only be used for a limited purpose: to confirm the meaning
resulting from the application of the general rule of interpretation, or to determine the meaning when
that interpretation leaves the meaning ambiguous or ob scure, or leads to a result which is manifestly
absurd or unreasonable.
1

3. No party to this dispute has argued that the terms of Articles 2 and 3 of the Paris Convention
are ambiguous or obscure. Instead, the materials pre sented by WIPO confirm the interpretation of the
Paris Convention presented by the United States in this dispute, applying the customary rules of
interpretation of public international law. Indeed, the materials provide useful emphasis in at least
two respects.

4. First, the materials confirm that, in adopti ng Article 2 and its predecessors, the negotiators
were keenly aware that, as concerns the protection of industrial property, a Member would have to
provide the same advantages to nationals of ot her Members as it provides to its own nationals,
regardless of the domestic laws or regulations in those other Members relating to intellectual
property. It was clear to the negotiators that, under Article 2, a Member would not be able to
condition the protection of industrial property provid ed to another Member's nationals on that other
Member itself having a particular system of protect ion (or indeed, any system) or having a particular
set of substantive or procedural rules in place.
2 Thus, in the example that recurs in the WIPO

1 See Vienna Convention on the Law of Treaties, Article 32.
2 As the United States noted in its first submission, citing the same materials as have now been
provided by WIPO, the importance of this principle was made clear at the very first negotiating session for the
Paris Convention in 1880, where the concept of national treatment in what was to become the Paris Convention
was first introduced. In the welcoming remarks for that first session, the French Minister for Agriculture and
Commerce stated that the Co nference could not achieve a complete in ternational treaty of industrial property
because of the difficulty of unifying national laws. He concluded that the Conference should, therefore, strive to
find the means to constitute a union which, without encroaching on domestic legislation
, would assure national
treatment and lay down a number of uniform general principles. Paris Diplomatic Conference (1880/1883),

materials, the United States would have to allow all Member national inventors 17 years of patent
protection, with minimal fees and no exploitatio n requirement, even though other Members imposed
significant fees for such protection, provided subs tantially shorter patent terms, and required
exploitation.3 The delegate from France, who made the in itial proposal for Article 2 in 1880, insisted
on the importance of providing the same advant ages to the nationals of other Members as one
provides to one's own nationals, regardless of the protections provided in those other Members, and
his successor at the Hague Conference reiterated the same points in 1925, when the national treatment
provision of the Paris Convention was last amended. 4 That conference rejected suggestions that the
regime be changed to compensate for the perceive d problem of requiring that a Member's nationals
benefit from strong protections in another Member , even though the first Member does not provide
the same protections.5

5. A second, and related, issue is that, througho ut the negotiations, there was an emphasis on the
fact that, under the national treatment obligation, Members were not obliged to change their
substantive law, or to put in place legal regimes that they did not currently have.
6 It simply required
that whatever regime was in place be applied equall y to nationals of other Members. For instance,
specifically in connection with the national treatment obligation with respect to indications of source,
the Belgian representative clarified that the Pari s Convention did not obligate Belgium to have a
particular legal regime in place for indications of source, but only that, whatever the regime, it would
apply even-handedly to all nationals. 7 And it was the expectation that Belgian nationals would
receive the same treatment in another Union Member as that Member's nationals, regardless of the
lack of a particular protection regime in Belgium.

6. These two points are significant because they sta nd in contrast to the EC GI Regulation. As
the United States has described in greater detail in its submissions, oral statements, and answers to
Panel questions, the EC will not register and pr otect the home-based GI s of another Member's
nationals unless that Member itself – not the national claiming the right, but the Member – satisfies
certain requirements. Among those requirements ar e that the Member concerned establish an EC-
style inspection system for GIs, and that the Member itself demonstrate that the GI is protected in the
Member (a requirement that accommodates well Members with an EC-style GI registration system,
but presents significant obstacles for Members that protect GIs in other ways). The Member must
also be able to assess whether an application for GI registration from one of its nationals satisfies the

pp. 14-17, at p. 16 (emphasis added). Also provided as Exhibit US-3. In the negotiations on the national
treatment provision, the French negotiator who had prepared the initial draft emphasized that, in order to be
acceptable, the convention would have to respect the internal legislation of a ll contracting parties to the extent
possible, and to restrict itself to an obligation to extend national treatment to foreigners. Paris Diplomatic
Conference (1880/1883), p. 33 (emphasis added). Also provided as Exhibit US-3. In the course of that
discussion, the national treatment obligation was clar ified by the deletion of the word "reciproquement"
 from
the original draft. Id., pp. 39-45. Also provided as Exhibit US-3. And indeed, in subsequent revisions to this
provision, several proposals to include a reciprocity element in the obligation found no support and were
withdrawn. For instance, a proposal by the United States to provide for the right to impose upon nationals of the
other countries the fulfillment of conditions imposed on its nationals by those countries found no support and
was withdrawn. Hague Revision Conference (1925), pp. 413-415 (First Sub-Committee). Also provided as
Exhibit US-4.
3 E.g., Brussels Revision Conference (1897/1900), pp. 95-97, 143-144, 195-196.; Hague Revision
Conference (1925), pp. 413-415. See also Paris Diplomatic Conference (1880/1883), pp. 33-45, clarifying that
the national treatment approach should be acceptable to countries, like The Netherlands and Switzerland, that do
not protect patents under their national law, because they would not have to treat foreigners better than their own
citizens.
4 Paris Diplomatic Conference (1880/1883), pp. 14-17; Hague Revision Conference (1925), p. 414.
5 See Hague Revision Conference (1925), pp. 413-415 (First Sub-Committee). Also provided as
Exhibit US-4.
6 See note 2, supra.
7 Brussels Revision Conference (1897/1900), p. 246.

requirements of the EC GI Regulation, which requires an infrastructure and decision-making
capability similar to that possessed by the EC and the EC member States (which also must make that
assessment under the GI Regulation). As the United States has pointed out in this dispute, these are
effectively requirements that, as a condition of obtai ning intellectual property protection in the EC for
their nationals, other WTO Members adopt aspects of a GI regime that are similar to what the EC has
chosen to adopt. In contrast, as reflected in th e materials provided by WIPO, the negotiators of the
Paris Convention intended that such intellectual property protections be made available to all
nationals of Members regardless of the internal laws and regulations of those Members and, in
particular, without a requirement that those Members adopt particular systems of protection.
8

7. Indeed, it is also revealing that, in the many pages provided by WIPO, there is considerable
discussion of the requirements that Members could impose on foreign nationals in order for them to
receive the same advantages as domestic nationals. By contrast, there is no discussion that the United
States could see concerning any requirements that could be imposed on other Members as a condition
of their nationals receiving the benefits of intell ectual property protections, aside, of course, from the
requirement to become a Member of the Union. 9 This, too, is consistent with the views of the United
States in this proceeding, based on the customary rul es of interpretation of public international law: it
is the nationals of other Members, not the Members themselve s, to whom national treatment is owed.
The EC GI Regulation denies this treatment to non- EC nationals when it imposes conditions that the
non-EC national himself cannot meet, but for which he must rely on his government.

8. In sum, the United States reiterates its positions , set forth in its submissions, oral statements,
and responses to Panel questions, that the EC GI Re gulation is inconsistent with the EC's national
treatment obligations under the TRIPS Agreement a nd the Paris Convention, as properly interpreted
using general rules of treaty interpretation, and s ubmits that the materials provided by WIPO confirm
and reinforce this interpretation and the inconsistencies of the EC GI Regulation.

Convention either drafted or intended to draft. Indeed, even the EC has abandoned any defense that these
conditions are consistent with national treatment.
9 Indeed, even if a country did not join the Union, however, its nationals could be eligible for national
treatment under Article 3 of the Paris Convention, if th ey had a real and effective commercial or industrial
establishment in the territory of a country of the Union.