Origin-based products in the Russian Federation
By Daria Novozhilkina, Attorney at Law (Russian Federation) and freelance writer
If well managed, geographical indications (GIs) and appellations of origin (AOs) can support product branding, rural livelihoods, and economic development. These distinctive signs indicate a connection between the quality, characteristics, and reputation of goods and their geographical origin. Recognizing their potential to create value, policymakers in many countries are promoting their use to help advance national economic development objectives.
Recent developments in the Russian Federation indicate that GIs are gaining traction within public policy spheres as a means of promoting regional development in that country. The Russian Federation covers a huge area spanning 11 time zones. Its vast cultural and geographical diversity has given rise to myriad products with the potential to qualify for protection as GIs or a variation thereof.
About geographical indications and appellations of origin
Geographical indications (GIs) and appellations of origin (AOs) are distinctive signs that inform consumers about the origin of a product and indicate that its special features are attributable essentially to its place of production. An AO implies that production, processing, and preparation take place within a defined geographical area and that the qualities and characteristics of a product derive exclusively or essentially from its geographical environment, including natural and human factors. To qualify for protection as an AO, the link with the place of origin must be stronger than that required for GI protection.
While AOs and GIs are internationally accepted terms, countries use various terms within their national laws to provide the same or similar legal protection.
In the Russian Federation, origin-based products are protected as designations of origin (DOs). Article 1516 (1) of the Civil Code defines DOs as “designations that constitute or contain a modern or historical, official or unofficial, full or abbreviated designation of a country, city or a rural settlement, area or other geographical locale, as well as a name derived from such designation, that has become known due to its use with regard to a good, the special characteristics of which are exclusively or mainly determined by natural conditions and (or) human factors that are characteristic for that geographical locale.”
When the Russian Federation joined the World Trade Organization (WTO) in 2012, it was required under the Agreement on Trade Related Aspects of Intellectual Property (TRIPS), to foresee the implementation of a special regime for GIs in its national law. At the time there was some uncertainty as to whether a DO as defined under Russian law was more akin to an AO or a GI. During the accession process, the representative of the Russian Federation indicated that its Civil Code was to be amended to align the definition of DOs with the TRIPS definition of GIs. This amendment remains in process.
At present, DO protection is granted upon registration with the Russian Federal Service for Intellectual Property (Rospatent), which issues DO certificates and maintains a State Register of DOs.
With a certificate in hand, producers can use their DO to brand and market their goods both on- and off-line but are prohibited from selling or licensing those rights (Article 1519, para. 4 of the Civil Code). Moreover, the registered DO may not be used by anyone who has not obtained a certificate, even in cases where the true origin of the product is indicated, or the designation is used in translation or accompanied by words such as “kind,” “type,” and “imitation” (Article 1519, para. 3 of the Civil Code).
Around 170 DOs have been registered with Rospatent so far. Examples include Narzan (mineral water), Tula Pryanik (a type of gingerbread), and Gzhel, Zhostovo, and Kholkhloma (ceramic handicrafts).
Following the establishment in 2012 of the Intellectual Property (IP) Council – which reports to the Federation Council, the Upper House of the Federal Assembly – and its recommendations, the Russian Government launched a new policy to encourage broader use of DOs.
The legal, economic, social, and political dimensions of GIs make them a useful element in promoting regional development. GIs can play an important role in preserving local traditions and knowledge; they can support livelihoods; increase opportunities for value creation and employment; and can generate environmental benefits through effective stewardship of local resources.
GIs provide consumers with detailed information about a product’s origins and the way it is produced. They guarantee specific features of a product – although not necessarily its superior quality – and their use requires all authorized producers to adhere to established standards to ensure consistent quality.
GIs are powerful marketing tools that enable producers to develop markets for their goods and transform their knowledge and skills into higher value products. Consumers are often willing to pay higher prices for authentic, high-quality products. In this way, GIs can improve rural livelihoods based on the local resource use and foster economic development. Market analysts at KPMG, estimate that the Russian Federation’s new GI policy could lead to an economic benefit of up to RUB 500 billion (over USD 73 million) for the Russian Federation by 2025. However, it is not always easy to bring GIs into play. Establishing a GI means producers have to work together to determine production methods, implement standards of quality and control, and to market and distribute their products. This can be challenging.
Identifying candidate products
More than one-third of the 80 plus counties that make up the Russian Federation have never filed an application for a DO. Many local producers and regional officials are unaware of the potential benefits of using GIs. This is a major barrier to their uptake and use.
The IP Council and Rospatent are therefore working to improve IP awareness, particularly with respect to DOs. In 2017, they issued and widely distributed Guidelines for the Registration and Grant of DOs to clarify registration procedures and explain the advantages of using DOs. Rospatent has also created a dedicated webpage for DOs and regional brands.
These efforts are beginning to yield results. In 2017, the number of applications for DOs rose to 56, from 44 in 2015 and 2016.
The IP Council is also calling on county officials to identify and report on potential candidate products by the end of 2018. Officials have also been urged to implement targeted programs to provide practical assistance in registering and promoting regional brands.
These efforts are being complemented by other federal initiatives, including the Ministry of Industry and Trade’s Brands of the Russian Federation scheme and the Ministry of Tourism’s drive to create a register of the top 100 national souvenirs. Together, these programs are reinforcing awareness of the value and economic potential of GIs and regional brands.
Improving the legal framework
Progress is also being made in improving the legal framework for origin-based products. On July 27, 2018, the State Duma (the Lower House of the Federal Assembly of the Russian Federation) passed the first reading of draft law No. 509994-7. The draft law recommends that the IP rights outlined in the Civil Code be extended to include GIs and DOs. It further seeks to boost the number of regional designations by lowering the threshold for GI protection compared to that required for DOs. It also foresees enabling the conversion of GIs into DOs and vice versa provided certain requirements are met.
Under the new proposals, the procedure for acquiring DO rights may change. Currently, a DO application must be filed with Rospatent along with a report from a designated authority confirming the product and its attributes are linked to the natural conditions or human factors associated with a specific territory. Just four entities are authorized to issue these reports: the Ministry of Health (for goods related to mineral water); the Ministry of Industry and Trade (for arts and crafts); the Ministry of Agriculture (for food and non-alcoholic beverages); and the Federal Service for Alcohol Market Regulation (for alcoholic products). Where products fall outside the purview of these authorities, it is not possible to obtain an eligibility report, and without a report, Rospatent cannot register a DO.
In an attempt to address this bottleneck, the draft law extends the list of goods eligible for DO protection and bolsters the powers of the above-mentioned bodies. Some of those powers may be delegated to regional authorities.
The draft law also includes a proposal to allow associations, unions, and other groups of producers to register DOs. At present, it is only possible for individual producers to do so. This promises to benefit all those in the DO value chain by enabling them to combine forces to deal with registration formalities, quality control, marketing and promotion, and IP enforcement issues. Details of the status of the passage of the draft law are available at: http://sozd.parliament.gov.ru/bill/509994-7.
Overcoming existing challenges
Poor awareness among producers about the benefits of DOs is inhibiting progress in expanding their use in the Russian Federation. In some instances, producers are opting to register trademarks rather than DOs to protect their products.
Trademarks are a perfectly legitimate means of protecting distinctive goods. They can be licensed by the owner to anyone, anywhere in the world, since they are linked to a specific company or trademark holder and not to a specific place.
In contrast, signs used for GIs or DOs usually resemble the name of the place of production or by which they are known locally. A GI may be used by anyone in the geographical area or origin as long as it is produced according to established quality standards, but can only be used by authorized producers. Unlike a trademark, a GI cannot be licensed.
When the public policy objective is to develop markets for local resources, support livelihoods, and foster regional development, policymakers may opt to expand use of GIs or DOs. In such instances, it is important that local producers understand the opportunities, and indeed the limitations, associated with the various IP protection options available to them. Should they work together to establish a DO from which they can benefit collectively? Or should they go it alone and individually register trademarks to protect their goods?
As IP rights, including GIs, are territorial, meaning they have a legal effect only in the jurisdiction in which they are granted, it is important to protect GIs in all markets in which they are likely to be commercialized. Beyond national law, GI protection can be acquired through regional and international mechanisms but may hinge on first protecting the GI in its country of origin.
Protecting a GI abroad can be achieved in various ways: by obtaining protection directly in the country concerned; via bilateral agreements; or through regional systems. For example, the Eurasian Economic Union (of which the Russian Federation is a member) is developing a system that allows authorized producers to register trademarks and DOs by filing a single application in a member country (see box). Producers that opt to use collective or certification marks may protect their goods abroad via the WIPO-administered Madrid System for the International Registration of Marks.
Alternatively, producers may use the WIPO-administered Lisbon Agreement for the Protection of Appellations of Origin and their International Registration or the Geneva Act to that Agreement, concluded in 2015. While not yet in force, the Geneva Act modernizes the 1958 Lisbon Agreement and makes it easier for producers to register and protect their AOs and GIs in countries other than the country of origin.
Much progress is being made in promoting the use of DOs in the Russian Federation. The ongoing transformation of its DO landscape promises significant dividends both for producers of origin-based products and consumers eager to savor the country’s vast cultural wealth.
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