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FAO / EBRD COOPERATION PROGRAMME ______
PROPOSED ACTION PLAN
for the
PROTECTION OF GEORGIAN WINE APPELLATIONS
August 2005_______
TABLE OF CONTENTS
A. INTRODUCTION...........................................................................2
B. KEY FEATURES OF THE GEORGIAN WINE SECTOR..........................4B.1 Current economic situation of the Georgian wine sector.......4B.2 Overview of the current situation of wine sector legislation. 5
C. WINE COUNTERFEITING IN GEORGIA.............................................6C.1 Main forms of wine counterfeiting in Georgia.......................6C.2 Main reasons for the development of counterfeit wines.......6C.3 Protection of Appellations of Origin.....................................7C.4 Current initiatives taken by the Government and proposed recommendations...................................................................10
D. PROPOSED ACTION PLAN...........................................................12D.1 Short term and long term actions......................................12D.2 Time frame of the Action Plan...........................................................17
ANNEX 1. People Met...................................................................................................................20ANNEX 2. Aide Memoire prepared during the May 2005 mission..........................................21
Appendix 1. Geographic indications (GIs)…...………………………...…………...34Appendix 2. Law of Georgia on vine and wine………………………………...…...37Appendix 3. The international regime for the protection of GIs………………….58Appendix 4. Law of Georgia on Appellations of Origin & GIs of goods……….…62Appendix 5. Statute of SAMTREST…………………………………..............…….69
ANNEX 3. Set of Documents............................................................................................ ............74
FAO / EBRD COOPERATION PROGRAMME______
PROPOSED ACTION PLAN
for the
PROTECTION OF GEORGIAN WINE APPELLATIONS
August 2005_______
Prepared by
Victor Mosoti, Legal OfficerFrédéric Julia, International Wine Specialist
and on the basis of findings by
Vlaho Kojaković, EconomistIlja Betlem, Legal Officer
Frédéric Julia, International Wine Specialist
A. INTRODUCTION
1. The proposed Action Plan was commissioned by the European Bank for Reconstruction and Development (EBRD) under its cooperation programme with the Food and Agricultural Organisation of the United Nations (FAO). It is the result of an assignment carried out by Messrs Frédéric Julia, International Wine Specialist, and Victor Mosoti, Legal Adviser (FAO), who visited Georgia from 13 to 23 July 2005. This assignment was the continuation of an earlier one of Messrs. Vlaho Kojaković, Economist (FAO), Ilja Betlem, Lawyer (FAO), and Frédéric Julia, International Wine Specialist, in May 2005.
30. The objective of this Action Plan is to specify activities that will help the Government of Georgia and private stakeholders to address the issue of counterfeiting of Georgian wine products, with a special focus on the protection of Georgian wine appellations 1 outside and inside Georgia. The Aide Memoire prepared during the May 2005 mission is attached in Annex 2.
31. The activities proposed in this Action Plan will also be carried out under the FAO/EBRD cooperation programme. However, they will require a high level of commitment from the Government of Georgia, as well as from private stakeholders. The commencement and implementation of these activities will therefore depend on the endorsement of the Action Plan. FAO recommends discussing the proposed Action Plan at the occasion of a workshop to be held in Tbilisi at the end of November 2005. The audience of the workshop would include Government and SAMREST officials, as well as a number of key private stakeholders. The FAO/EBRD will present the Action Plan and request the endorsement of participants, after integrating their comments to the extent possible. To move ahead with the implementation of these activities, the EBRD and FAO would suggest that the Georgian Ministry of Agriculture (MoA) confirm its endorsement of the final Action Plan by sending a letter to FAO.
1 For a general definition of geographical indications and appellations, see Annex 2.
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32. The assignments that led to this Action Plan were co-financed by FAO and the Government of Canada. The activities proposed in the Action Plan would also be financed by FAO and the Government of Canada, provided that they are supported by the Government of Georgia.
Activities conducted by the FAO team during the July 2005 visit to Georgia
33. During the July 2005 visit to Georgia, meetings were held with Government representatives, representatives from the wine industry, and domestic and international institutions active in the sector. In particular, discussions with the Minister and Deputy Minister of Agriculture were held. The continued support and input from the MoA and the Director of SAMTREST were greatly appreciated. A complete list of the persons involved is attached to this report as Annex 1.
34. The main focus of the meetings and discussions was the current economic, institutional, and legal situation of the wine sector. The main problems facing the industry were identified, and a set of possible pragmatic actions to fight counterfeit wines and improve the situation was explored.
____________________
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B. KEY FEATURES OF THE GEORGIAN WINE SECTOR
B.1 Current economic situation of the Georgian wine sector
7. Key figures on the Georgian wine sector include:
According to the MoA, there were 62,000 ha under vine in Georgia in 2004, including 4,640 ha (less than 7.5%) produced in Appellation of Origins regions. According to OIV figures, of an estimated 6 million hectares of vineyards planted worldwide, Georgia accounts for less than 1%.
As a reminder (see Annex 2), Georgia has 18 Appellations of Origin in various regions of the country.
Table 1: The different Georgian wine appellations and their respective sizes (Source: SAMTREST).
The total quantity of grapes harvested in 2004 was 282,500 tons, of which 46,500 were industrially processed for wine making by 162 officially registered companies.
The MoA estimates that the domestic per capita consumption of wine is around 15 litres per year and the size of the domestic market is around 67.5 million litres.
In addition to the quantity of wine sold on the domestic market, 21,645 million litres of wine (approximately 28.8 million bottles) were exported in 2004 by 62 companies, 10 of which accounted for 95% of total exports.
According to the MoA, wine exports for the six first months of 2005 have reached 25.5 million bottles, an increase of almost 100% over last year.
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93%
0%1%
4%
0% 0%1%1%
1 2 3 4 5 6 7 8
93%
0%1%
4%
0% 0%1%1%
1 2 3 4 5 6 7 8
Russia accounts for more than 90% of total export volume.
Chart 1: Stucture of Georgia’s wine exports (3 first months of 2005) (Source: SAMTREST)
If one adds the domestic market (67 million litres) and export market (21 million litres), the Georgian wine trade represents less than 0.4% of the world wine market (estimated to be around 233 million hectolitres).
B.2 Overview of the current situation of wine sector legislation
31. The vine and wine sector in Georgia is currently regulated according to the following laws (See Annex 2 for the full list of decrees and normative acts):
Law of Georgia on Wine and Vine adopted on February 4, 2003;
Law of Georgia on Geographical Indications and Denomination of origin of products adopted on July 4, 2002;
Adoption on February 11, 2003 of the Statute of the Legal Entity of Public Law: State Vine and Wine Department “SAMTREST”
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C. WINE COUNTERFEITING IN GEORGIA
C.1 Main forms of wine counterfeiting in Georgia
9. There are three main forms of wine counterfeiting taking place in Georgia:
Fake wines produced by mixing spirits, colour, and powder;
Georgian wines bearing a false appellation, which means that some Georgian wines are sold with labels that mislead the consumer: for example, labels bearing Georgian appellations when in fact the wine does not come from the appellation;
Non-Georgian wines (originating from foreign countries as Moldova, Chile, Bulgaria, Spain, Israel, etc.) bearing Georgian wine appellations.
30. The two main targets for counterfeit wines are the domestic and Russian markets.
As for the domestic market, the absence of law enforcement has created favourable conditions for the development of counterfeit wine activities.
Russia, even before Soviet times, has always been a very strong market for most Georgian wines, especially wines from the Kindzmarauli, Manavi, and Kvanchkara appellation regions, which are highly esteemed by Russian consumers. However, most Russian consumers have not made the connection between the names of these wines and their Georgian region of origin. Within this context, two major consequences have rapidly prevailed:
If a Georgian company wants to export to Russia, it is essential to have the appellations of Kindzmarauli, Manavi and Kvanchkara in its portfolio. As the vineyard areas in these appellations are quite small (see Table 1), the quantity of wine produced is insufficient to meet the demand. Because of this situation, the temptation to sell counterfeit wines is very high.
For non-Georgian wine companies trying to penetrate the Russian market, the fact that consumers do not realize that Kindzmarauli, Manavi and Kvanchkara are Georgian appellations has made it easy to pass off wines from Chile, Bulgaria or Moldova as Georgian wines.
C.2 Main reasons for the development of counterfeit wines
Size and boundaries of the Georgian Appellations
31. According to the law, “the areas and grape-growing provinces are defined by the Georgian Scientific Research Institute of Horticulture under a procedure established by the MoA.”
32. The work conducted by the Institute (in addition to work conducted during Soviet times), has resulted in very small vineyard areas in some Georgian appellations (see Table 1): for example, the size of the Kchanchkara Appellation of Origin as defined by the Institute is 343 ha, 40% of which is currently planted with vines – the size of Kindsmarauli is 247 ha, 35% of which is currently planted with vines.
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33. The limited number of hectares of vineyards in some Appellations of Origin areas automatically creates scarcity of supply of grapes available to process wines within the boundaries of the Appellation.
34. If such a situation is common for all countries that have adopted a similar appellation system, the lack of efficiency of the Georgian control system to prevent fraud and production of counterfeit wines has opened the door to fraudulent activities such as using grapes from outside the appellation regions.
Difficulty of tracing wine movements
35. According to the Georgian Law on Wine and Vine, documents are required at almost every stage of wine production: licensing of grape and wine producers, declaration of intention to produce various wines, declaration of wine inventories, declaration of sales, etc. Unfortunately, the system in place does not provide ways of tracing or associating these different documents, rendering the issuance of false declarations easy. In addition, there are no documents required for the transport of wine in bulk or in bottle within Georgia.
Laboratory certifications
36. According to the MoA, 26 laboratories are officially accredited by SAKSTANDARD, but only a few of them are able to conduct wine analysis. The Laboratory of the Scientific Research Institute in Tbilisi has received World Bank funding and, in the near future, should have the capacity to conduct analysis according to OIV standards. With GTZ funding, a new state-of-the-art laboratory located in Tbilisi has been established. The MoA has yet to grant accreditation to this laboratory, but according to the persons met during this mission, the laboratory should be operational by the end of October 2005. Accreditation by EU and other international organizations should follow. If proper management is provided, this new establishment will help streamline the issuance of certificates of wine analysis for export.
Lack of enforcement of regulations regarding sales of wine on the domestic market
37. Current legislation provides the necessary legal environment to fight against infringements and malpractice within the domestic market. The entity responsible for monitoring and enforcing these regulations is SAMTREST. While it must be emphasized that SAMTREST has improved its efficiency, credibility and service delivery in the past one year, the lack of proper funding for its functions (SAMTREST has a very limited budget, no cars, underpaid employees, etc.) prevents this organization from doing what it is designated to do properly.
38. In addition, SAMTREST does not operate according to its statutes adopted on February 11, 2003: the Advisory Board that should have involved the private sector has never been formed. The main reason given by the private stakeholders is that they not only want to be advisors, but also actors in SAMTREST’s management and decision-making.
C.3 Protection of Appellations of Origin
Registration of appellations
39. Currently, some of the 18 Georgian wine appellations are not fully registered nationally and internationally. Taking advantage of this lack of protection, some private companies have registered some of these names as trademarks in foreign countries while one (Kvanchkara) is registered as a collective mark under Chapter V of Georgia’s Law on Trademarks.
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40. These different forms of registration and protection will lead to a problem of ownership, particularly when these same names will be registered as appellations belonging to the state under the Lisbon Agreement.
Conflict between protection of appellations and trademarks
41. Under the Lisbon Agreement, Georgia has submitted six names for registration as appellations of origin. These names are: Akhasheni, Mukuzani, Kindzmarauli, Tsinandali, and Kvanchkara.
42. All of these appellations are already registered in Bulgaria as trademarks belonging to Vladimir Distilars Kompany, a Bulgarian company. In this regard, Bulgaria has rejected their registration as appellations under the Lisbon Agreement, and notification in this regard has been duly received from the World Intellectual Property Organization (WIPO). Georgia has challenged this rejection in Bulgarian courts.
43. The key legal problem is that the Georgian appellations were only registered as such after the registration of the names as trademarks in Bulgaria. Further, it is almost certain that Bulgaria is not the only country that is going to reject the registration of Georgian appellations.
44. As the process of registration continues (with the other 13 names) there is a possibility of rejection by other countries. Hence, a coordinated strategy to deal with this problem is needed. In this regard, the mission recommended increased use of the WTO dispute settlement system as detailed in the table below. This recommendation was received enthusiastically by the government officials as a non-adversarial approach in which alternative leverage (such as membership in the “friends of GIs” group) might work in Georgia’s favour.
Membership or accession to relevant international agreements
45. The problem in Bulgaria is complicated by a third and related issue: Georgia is not a member of the Madrid Agreement for the Repression of False or Deceptive Indications of Source on Goods (the Madrid Agreement). It is, however, party to the Lisbon Agreement and the Paris Agreement.
46. The problem is that the Lisbon Agreement and the Madrid Agreement are complementary and, in substantive parts, e.g. Articles 4 and 5, the Lisbon Agreement cross-references the Madrid Agreement. In Georgia’s case, this linkage - that would result in stronger protection - is broken.
Bilateral agreements
47. Georgia is about to commence negotiations with Ukraine and the European Union over bilateral agreements for enhanced protection of Georgian appellations. Similar negotiations with Russia are planned.
48. It is important in such negotiations that:
adequate preparations be undertaken by the negotiating team in order to ensure that the results yield increased protection for Georgian appellations;
key stakeholders, including the private sector, be involved through constant consultations at the national level with the negotiating team in order to ensure that their views are adequately reflected in the negotiated agreement.
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Table 2: Advice on enhancing legal options for protection of Georgian appellations
Issue Our Opinion
1 Conflicting and incomplete registration of Georgian Appellations
Our advice is that national registration of the Georgian appellations should be completed as soon as possible. In challenging the foreign registration of Georgian appellations, the private sector (which, in some instances, has already registered the same names as trademarks) should be closely involved. In addition, to address the problem of ownership, Georgian companies that own such trademarks and the one registered as a collective mark, should be given up in favour of state registration as appellations of origin. A coordinated effort between SAKPATENTI, SAMTREST, the MoA, the Ministry of Foreign Affairs, and the private sector, is the most viable way to proceed. Clearly, a long-term strategy is needed.
2 Court action in Bulgaria and in other countries, and other forms of dispute resolution1
In addition to pursuing court action in Bulgaria, our advice was that Georgia uses the WTO dispute settlement system. According to the Dispute Settlement Understanding, Georgia can request to enter into consultations with Bulgaria for a maximum period of 60 days. This is a useful approach because: (i) it is not adversarial; (ii) it is cheap, given that consultations will be done in Geneva by the embassies with support from Tbilisi; (iii) Georgia can seek the support of its position from other “friends of GIs” such as the EU; (iv) the process cannot be endless.
3 Membership or accession to relevant international agreements
Our advice in this regard was that Georgia seriously considers joining the Madrid Agreement, in order to complete the circle of protection that is available under the network of relevant agreements. This should be done despite the existence of the WTO TRIPs Agreement and membership in any of the other agreements.
4 Negotiations on bilateral agreements
Our advice in this regard is that these agreements could be a useful way to deal with the problem of counterfeiting but they have to be coupled with a sound legal strategy at the national level (see section below for what such a strategy should entail). In order to do this, adequate preparations should be undertaken by the negotiating team in order to ensure that the results yield increased protection for Georgian appellations. Key stakeholders, including the private sector, should also be involved through constant consultations at the national level with the negotiating team in order to ensure that their views are adequately reflected in the negotiated agreement.
1 Court action in Bulgaria has been initiated through joint efforts of SAKPATENTI, the Ministry of Foreign Affairs (through the Georgian Embassy in Bulgaria) and the Ministry of Law and Justice. Many other interested players, such as the Ministry of Agriculture and the wine companies are only minimally involved. Whereas the government (the Ministry of Law and Justice, Ministry of Foreign Affairs and agencies like SAKPATENTI) are the proper initiators, it is important that all stakeholders be involved and briefed.
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C.4 Current initiatives taken by the Government and proposed recommendations
49. There are three separate action plans, each with a different approach, currently under discussion by government officials and Parliament:
Table 3: The differents strategies currently discussed by Local Governements
Main actions Aim of the programme Our opinionPlan proposed by the MoA and SAMTREST
o Launch a program to define and map boundaries of Georgian appellations. The system would be based on satellite identification of parcels and control of its use.
o Create a passport system that would identify each parcel (owner, size, type of vine, etc.) and state the type of grapes grown.
o Expand current size of renowned appellations such as Kindzmarauli, Kwanshkaka, Manavi and create a “classic” category.
o Estimated budget to implement this action plan: GEL1.3 million.
o Reform laboratories certification: decrease the number to approximately 5.
o The view of the Ministry is that most counterfeit wines are a result of the inability to track the grapes from vineyard to wineries. By creating a system using satellite identification of parcels, the Ministry hopes to have a clear view of what is planted, where and by whom.
o The project to analyse by satellite the main Georgian Appellations and to monitor the accuracy of the information, even if it could be a useful tool for the future, would be a very long process, involving a high level of financial resources.
o The timing and the financing plan presented by the MoA seems unrealistic. We do not think that this program could solve the problem of wine counterfeiting in Georgia.
o The project to create a “classic” category also seems to be a MOA/SAMTREST response to its incapacity to implement current law. Our opinion is that it would generate more consumer confusion and more counterfeit wines.
Plan proposed by the Ministry of Economic Reforms1
o Give ownership and right of use of the Georgian wine appellations to the private sector.
o By turning over ownership of the appellations to the private sector, the Ministry hopes that
o Increasing the role of the private sector in the management and control of the appellations should be
1 The plan prepared by the Ministry of Economic Reforms is still currently being discussed within the Parliamentary Committee on Agriculture. The mission team was informed that several presentations were made to the members of the committee by representatives from the Ministry and that the process of explanation and consultation is still going on. It should be assumed that the plan will eventually be presented to the entire Parliament for approval, most probably in the form of a new bill for re-organizing the wine
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o Create a Wine Board, involving mostly the private sector, to manage the appellations.
o A fee of GEL50,000 to GEL100,000 would be required to enter the wine board.
o Propose a resolution to the Parliament.
the sector will be better managed, better financed, and that the private sector will take the necessary steps to initiate legal actions against counterfeiters.
seen as a positive initiative.
o However, giving ownership of appellations to the private sector would be against the concept of Appellations of Origins and would not solve the problem of wine counterfeiting.
Plan proposed by the private sector and supported by the Chairman of the Agricultural Committee of the Parliament
o Create a new entity, involving Government and private stakeholders - 50/50 - that would establish the strategy of the sector.
o This new entity would be independent from the Government, even if the Government would have representatives.
oWine Chambers would be created with the capacity to raise funding from the private sector, to fight against the export of counterfeit wines, and to develop marketing strategy to increase Georgian appellation recognition overseas.
o Increase SAMTREST power to control the wine sector and wine sales in Georgia.
o Fighting counterfeiting of wines overseas requires expenses, legal actions, and marketing actions that could only be financed by the private sector. The Wine Chamber would be responsible for these tasks.
o Inside Georgia, responsibility to fight against counterfeit wines would mainly fall under the authority of SAMTREST.
o This approach seems realistic and, taking into consideration the very limited budget available at the government level, it is also advisable to involve private funding.
o However, this plan can have a positive result on the domestic market only on the condition that SAMTREST receives proper funding from the Government.
sector or as an amendment bill to existing law.
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D. PROPOSED ACTION PLAN
D.1 Short term and long term actions
Improve the traceability of Georgian grape and wine production
30. The set of documents (established and controlled under SAMTREST responsibilities) currently used for wine production in Georgia is the following (see Annex 3 for copies of documents B, D, E, F and G).
Chart 2: Flow of certificates and documents
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to be submitted before 1 December
to be submitted before 10 January
Domestic market
Export market
Bottling
Wineries
Grape producers
Export certificate (EUR1, CT-1, etc.)
Laboratory analysis
Wine inventory
Notification of intention to produce AO
Notification of intention to produce wine
Licence to produce wine
Licence to produce grape wine
Passport of parcels
Only required if production of AO is intended
New project: start in August 2005
A
B
C
D
E
G
H
F
31. Proposed improvements include:
Documents D, E, F and G, should all be linked to B in order to have a straightforward set of documents from the bottle to where the grapes are grown. The element that could be used is the passport of parcels (B).
A new document should be created to trace wine transportation within Georgia: when bulk wine or unlabelled wine is moved from one place to another, a document should be completed giving the name of origin, identification of the wine allotment, the destination, and the name and date of transportation.
Document F should be improved to show initial stock. It should be produced every month by the wineries.
Create a new Certificate of Origin for appellation wines
32. The current document used in Georgia as a “Certificate of Origin” is the EUR 1 (for Europe) and CT-1 (for Russia). According to EU regulation, the EUR 1 (See specimen in Annex 3) is not a Certificate of Origin. It is a Certificate of Movement used to determine if, according to signed agreements between EU and other countries, preferential custom tariffs or treatment should be given to the product exported. Therefore, if the exporter does not wish to qualify for a potential preferred treatment, he is not required to fill in a EUR1. Depending on the country, this document is issued by authorized libraries, Chambers of Commerce, or any institutions specialized in selling official custom certificates.
Table 4: List of countries that have signed preferential customs treatment with European Union and with whom EUR 1 is useful
Algeria Estonia Lithuania Morocco SloveniaBosnia States from the ACP * Lebanon Norway SwitzerlandBulgaria Hungary Liechtenstein Poland SyriaCyprus Iceland Lithuania Czech Rep. TOM **Croatia Israel Macedonia Romania TunisiaEgypt Jordan Malta Slovakia Turkey ***Yugoslavia* Africa, Caribbean, Pacific** New Caledonia, French Antarctic, Wallis & Futuna*** The corresponding custom document is the ATR.
33. The Certificate of Origin is used in the EU in addition to the EUR1 (see facsimile in Annex 3). It is usually issued by the Chamber of Commerce and, in the wine business, the Wine Board (Association of the wine producers/State control Office) is responsible for verifying the information given by the exporter. A Certificate of Origin is usually composed of a document with a minimum of two folders: (i) the first one, white, should be sent to the country of destination; (ii) the second one is kept by the customs of the exporter. Both folders should have the same serial number. Both folders are stamped by the authorized body (usually the Chamber of Commerce). It is our recommendation that Georgia begin issuing Certificates of Origin to attest that the wine sold is from Georgia or from a specific Appellation of Origin. They should be delivered by SAMTREST only after carefully verifying that documents A to G have been properly filled in and are in accordance with the law. It is our opinion that the Certificate for Customs (EUR 1 or CT-1) currently issued by SAMTREST should be issued instead by the Georgian Chamber of Commerce.
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Focus SAMTREST’s role more on control of activities
34. The MoA is currently encouraging SAMTREST to implement, with its own human and financial resources, a program of “passportization” of the main Georgian Appellations and eventually the whole country. SAMTREST does not have sufficient capacity to effectively conduct such an ambitious task, while respecting their proposed budget of GEL1.3 million. Concrete reasons to doubt the effectiveness of such a program is that, per appellation, it involves a minimum of 800 to 1000 passports to be filled in, verified, and computed, which seems far beyond SAMTREST’s human, technical, and financial capacities. By deciding to tackle the problem of counterfeit wines through the grape producers, SAMTREST is choosing the more expensive and difficult approach but avoids direct confrontation with the wineries1.
35. Our view is that SAMTREST should be more involved in controlling than actually doing this “passportization”. We would recommend that SAMTREST give responsibility to the private sector to request from the grape producers a proof of the origin of the grapes. No certificate should be given to any winery that is not able to provide a full set of documents showing that the wine sold is made from a well-identified source of grape.
1 For various reasons, it appeared to us that SAMTREST is, in some way, reluctant to directly impose any constraints to the wineries and finds it easier to impose it to the grape growers. The “bottom to top” approach currently implemented by SAMTREST to request from the 10 000 grape growers to fill in forms and documents is expensive, time and finance consuming. The top to bottom approach that we propose will mean that SAMTREST will ask the wineries (162 registered) to do the job and limit SAMTREST’s action to controlling it. This approach is less expensive and easier to implement but raises the question of SAMTREST’s capacity to impose this new procedure to the wineries.
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15 companies doing 90% of the business
62 main companies
162 wineries
10,000 grape growersSAMTREST primarily
targets
15 companies doing 90%
of the business
62 main companies
162 wineries
10,000 grape growers
SAMTREST has initiated a BOTTOM to
TOP approach: this approach is both
expensive and difficult to control
We would recommend a TOP to BOTTOM
approach: less expensive and easier
to control
SAMTREST should primarily target
36. In addition to this task, stricter control should be conducted domestically, more specifically, in bazaars and liquor Stores. SAMTREST should request managers of bazaars and liquor stores to submit all the necessary proof to demonstrate that the wine sold is not fake or counterfeited.
Restructure institutional organization of the sector to give more responsibility to the private sector
37. The wine sector in Georgia can no longer function without more involvement from the private sector. As initially suggested in the final report of the FAO technical assistance project (TCP) provided in 2000 and 2001, a new body, with representatives both from the private and the public sector, should be created and should take charge of the sector.
38. We would like to recommend, as previously stated in the FAO report presented in 2001, the formation of an entity with half private sector and half government officials. Such an entity should not be placed under the MoA, but a representative from the MoA should have a seat. These initial ideas should be further analysed and discussed with all the stakeholders and government bodies involved in the wine and spirits sector in a workshop to be organized at the conclusion of Phase I at the end of November 2005.
Increase international legal actions
Short-term legal strategy
39. The problem of illegal use of Georgian wine appellations will remain a recurrent problem. A coordinated legal strategy for addressing the problem is needed. However, in the short-term, some proposals could also be made:
Designate SAKPATENTI as the national notification point for international legal action :
Currently, the Government is involved in court action in Bulgaria. In addition, some companies (such as GWS) are involved in litigation over trademarks of popular names in foreign countries (for example, in Russia).
In this regard, channels for cooperation between the government and the private sector should be found, since the two are clearly complementary. One way to begin cooperation in the short-term could be for SAMTREST to act as the notification point for any foreign legal action initiated by the government or a private company.
Increased utilization of the WTO dispute settlement process :
According to the Dispute Settlement Understanding, Georgia can request to enter into consultations with Bulgaria for a maximum period of 60 days. This is a useful approach because:
it is not adversarial;
it is cheap, given that consultations will be done in Geneva by the embassies with support from Tbilisi;
Georgia can seek the support of its position from other “friends of GIs” such as the EU;
the process cannot be endless.
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Membership in all international agreements :
Georgia should seriously consider joining the Madrid Agreement, in order to complete the circle of protection that is available under the network of relevant agreements. This should be done despite the existence of the WTO TRIPs Agreement and membership in any of the other agreements.
Long-term strategy for coordinating legal action
40. As already mentioned, an institutional mechanism for organizing the wine sector in Georgia is of paramount importance. Further, such an institutional structure should have a long-term legal strategy for monitoring illegal use of Georgian wine names and appellations and for initiating legal action against entities engaged in such practices, including at the international level.
41. In order to deal with the problem of lack of an organized and institutionally sound legal strategy for dealing with the problem, the mission team synthesized various recommendations given into two basic models, as below.
42. It should be noted that elements of these two models were proposed by some private sector entities. The two models in this section should be looked at purely as a long-term legal strategy for dealing with the problem of counterfeiting. In particular, the funding arrangement and the functions of the resulting entity should be scrutinized in a roundtable discussion to be held in October 2005.
Model 1 : This first model will involve the creation of a powerful Supervisory Board comprised of both private sector and government representatives. This board will appoint the Director of SAMTREST, raise money for the operation of SAMTREST (from both government budget and private sector contributions), and set the agenda for fighting the problem within Georgia and internationally. It will coordinate the hiring of foreign lawyers to file cases in places where counterfeiting or infringement of Georgian wine appellations is taking place. It should be pointed out that the Ministry will nominate someone to sit on the Supervisory Board, but the Minister will not have direct single-handed influence over the activities or budget of the Board.
Ministry of Agriculture and Food
Supervisory Board of 12 Members (6 private, 6 public)
SAMTREST
SAMTREST Director Appointed by the Board
Funding Pool
Government Budget
Private Sector
Model 1
SAMTREST FunctionsCurrent regulatory functionsCoordination of legal action
nationally and internationally
Coordination of national and international marketing of Georgian wines
No direct supervisory role except through a
representative
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Model 2 : In the second model, a Wine Chamber will be created within the Georgian Chamber of Commerce. This will be entirely private sector driven. The Wine Chamber will coordinate, in liaison with SAMTREST and other government agencies like SAKPATENTI, the monitoring of illegal use of wine appellations and counterfeiting and pool industry resources in order to fight the problem domestically and internationally.
D.2 Time frame of the Action Plan
43. The proposed Action Plan and time frame of implementation for an improved capacity in monitoring could be as follows:
Table 5: Proposed Action Plan and time frame for implementation
Proposed Project Activities
Objectives Duration Expected Results
1 Assistance in institutional re-organization and strategic plan for the entire wine sector
FAO will assist in organizing roundtables with all the interested parties (wine institutions, Government, private stakeholders, etc.) involved in the wine sector to identify the most effective ways to combat counterfeiting.
12 months
(i) assistance in framing the institutional organization of the wine sector provided;(ii) appropriate amendments to the Law on Wine and Vine effected to allow for such a normative instrument; (iii) appropriate legal instrument drafted (probably in the form of a Ministerial Order)
Georgia Chamber of Commerce
The Wine Chamber
100% Private Sector
Function 1
International Legal
Services
Ministry of Agriculture & Food
SAMTREST
Model 2
Function 1
Marketing Georgian wine Appellations
Cooperation with and Legal Action
through SAMTREST
Function 1
National Legal
Services
Export Clearance
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(i) advice provided to the Chamber of Commerce and revisions to the Charter of Establishment proposed to take account of new structural changes and functions.
2 Legal instrument for the establishment of the institutional mechanism for combating counterfeiting1
FAO will assist SAMTREST or the Chamber of Commerce in drafting the legal instruments necessary for the establishment of the institutional mechanism.
3 Assistance in updating and improving the sets of documents related to wine production and processing
FAO will audit current sets of documents used from grape production to wine sales and make practical recommendations on necessary improvement to combat counterfeit wines.
2 weeks (i) SAMTREST is currently trying to translate and use EC documents (mostly German), hoping to find the best way to track wine processing from harvest to sales. It would be helpful to assist SAMTREST in this task by bringing international assistance and adapting the relevant documents to fight effectively against counterfeit wines.
4 Training workshops on international instruments relevant to geographical indications and on the negotiation of bilateral agreements
The seminar will be aimed at precisely identifying the legal rights and obligations in the Lisbon Agreement, the Paris Agreement and the TRIPs Agreement. Particular focus will be paid to the options given for resolving the problem of illegal use of appellations, the conflict between trademarks, collective marks and appellations, and for dispute settlement.
Seminar of 2 days
(i) Government and private sector legal staff trained. The seminars will target government officials (especially lawyers) in SAKPATENTI, SAMTREST, the Ministry of Foreign Affairs and the Ministry of Economy. In addition, legal staff from the wine companies, Chamber of Commerce and the Business Federation will participate. (ii) Particular focus will be paid to the options given for resolving the problem of illegal use of appellations and on the procedures for the settlement of disputes available (such as under the WTO).
5 Training on national laws regulating the wine sector
The seminar will be aimed addressing the problem of lack of enforcement due unawareness of what the law requires. It will explain the substantive obligations in national laws (both parliamentary statutes and ministerial orders) and how they relate to each other in the wider context of government functions.
Seminar of 2 days
(i) Government and private sector lawyers and other staff will be trained on the legal framework and what it requires them to do, as well as the rights and obligations it creates. Particular focus will be paid to the orders, regulations and other subsidiary legislation. (ii) Through such an exercise, the law might be better implemented by raising awareness of what the obligations are. Presently, many substantial parts of the law are
1 Assistance will be provided in working out a charter for a new institution (whatever form it might take), and if necessary, regulations on how it should be organized. This charter or regulations will certainly include: (i) the legal personality of the institution; (ii) its powers, duties and responsibilities; (iii) and management structure; and others.
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forgotten or un-enforced.
6 If demanded by the relevant stakeholders, a reference manual on extra-territorial enforcement of intellectual property rights
The goal will be to collect all the wine and appellation names, related laws and subsidiary legislation, and the relevant international agreements in one volume, along with some precise commentary and highlights on what each requires. This will be available in Georgian and might be a useful tool for the industry as a whole.
6 months (i) This will be a useful reference tool to all players in the industry and will address the current problem whereby very few people have a solid understanding of what international agreements say and what is required under national law.
7 Study tour The study tour will be undertaken by staff (both decision makers and lawyers) from SAMTREST, SAKPATENTI, Ministry of Foreign Affairs, and the Ministry of Agriculture.
1 week Study tour in:(i) Geneva, Switzerland: WTO, WIPO and ACWL(ii) Bordeaux (Appellation of Origin organisation), Paris (INAO, OIV), France: Industry groups (iii) Lisbon, Portugal: Industry groups
Annex 1
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People Met
1. Mr. Michael Svimonishvili, Minister of Agriculture
2. Mr George Makharashvili, Deputy Minister of Agriculture
3. Mr. Alexander Kacharava, Senior Adviser of the State Minister on Reform Coordination
4. Mr. Teimuraz Ortoidze, Chairman of Vine & Wine Department “Samtrest”
5. Mr. Archil Lobjanidze, Lawer of Vine & Wine Department “Samtrest”
6. Mr. Alexander Khvtisiashvili, Counselor of Division of Cooperation with International Economic and Financial Organizations, Ministry of Foreign Affairs
7. Ms. Ekatarina Gazadze, Financial Analyst, EBRD
8. Mr. Michel Jambou, Project Manager of Food Security Project, Delegation of the European Commission to Georgia
9. Mr. Giorgi Isakadze, Executive Director, Federation of Georgian Businessmen
10. Mr. Mamuka Meskhi, Assistant Representative in Georgia, FAO
11. Mr. Ambros Dotzer, Project Director GTZ office Tbilisi
12. Mr. Merab Kvimsadze, Deputy Director-General, SAKPATENTI
13. Mr. Revaz Tabukashvili, General Director Department of Privatization, State Minister of Economic Reforms
14. Mr. Nodar Chkhartishvili, Director of the Scientific Research Institute of Horticulture, Viticulture and Wine-Making
15. Ms. Ana Manjgaladze, Head of Legal Division, GWS Co. Ltd.
16. Mr. Levan Katsitadze, Executive Director, Teliani Valley PL
17. Mr. George Kipiani, Marketing Manager, Teliani Valley PLC
18. Mr. George Kakabadze, General Director, Georgian Chamber of Commerce and Industry
19. Mr. Archil Mazlashvili, General Manager, Gujuni Wine Cellar
20. Mr. George Margvelashvili, President of JSC “Tbilvino”
21. Mr. Zurab Margvelashvili, Executive Director of JSC “Tbilvino”
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Annex 2
Aide Memoire prepared during the May 2005 mission
Prepared byVlaho Kojaković, Economist,
Ilja Betlem, Legal Officer,Frederic Julia, Wine Specialist,
20 May 2005_______
A. Introduction
In the context of its cooperation agreement with the European Bank for Reconstruction and Development (EBRD), the FAO was requested to identify issues leading to counterfeiting of Georgian wine products, including and related to the protection of Georgian wine appellations 1 outside and inside Georgia.
In this context, the first FAO mission, composed of Vlaho Kojaković, Economist, Ilja Betlem, Legal Officer, and Frederic Julia, Wine Specialist, visited Georgia between May 2, 2005, and May 7, 2005. Follow up is planned in the summer.
B. Activities conducted by the team during the first mission
During the mission, meetings were held with the Government representatives, as well as the representatives from the wine industry and international institutions active in the sector.
Mr Michael Svimonishvili, Minister of Agriculture Mr Teimuraz Ortoidze, Chairman of Vine & Wine Department SAMTREST Mr Levan Chiteeishvili, Head of Division of Relation with International Organizations Mr Roman Kakulia, Head of Department of International Relations, Ministry of Agriculture Mr Alexander Khvtisiashvili, Counselor of Division of Cooperation with International
Economic and Financial Organizations, Ministry of Foreign Affairs Ms Ekatarina Gazadze, Financial Analyst, EBRD Mr Federico Berna, Food security officer, Delegation of the European Commission to Georgia Mr Mamuka Meskhi, Assistant Representative in Georgia, FAO Dr Rezo Ormotsadze and Irina Gabriadze, Project Management Specialists, Office of
Economic Growth, ASAID/Caucasus Mr Heinrich-Jürgen Schilling, Director GTZ office Tbilisi. Mr David Gabunia, Director-General, SAKPATENTI Mr Zurab Neparidze, Deputy Director-General, SAKPATENTI Ms Ana Manjgaladze, Head of Legal Division, GWS Co. Ltd. Mr Zurab Ramazashvili, Chairman of the Board, Telavi Wine Cellar (Co. Ltd) Mr David Maisuradze, General Director, Telavi Wine Cellar (Co. Ltd) Mr Nodar Chkhartishvili, Director of the Scientific Rresearch Institute of Horticulture,
Viticulture and Wine-Making Mr George Margvelashvili, President of JSC “Tbilvino” Mr Zurab Margvelashvili, Executive Director of JSC “Tbilvino”
In addition five visits were made to Leading Georgian Wineries on May 5 and 6:
Shumi winery GWS winery
1 For a general definition on Geographical indications and appellations see Appendix 1.
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Telavi Wine Cellar winery Teliani Valley winery Tbilvino winery
The current situations were discussed in the sector and the main problems facing the industry. Both Government and industry representatives highlighted the importance of adequate action against the counterfeiting of Georgian wine products and the protection of Georgian wine appellations outside and inside Georgia.
The FAO mission agreed to prepare a practical and balanced plan of action that can be discussed as such with the Ministry of Agriculture, SAMTREST, SAKPATENTI, and all the international agencies involved in the sector, including GTZ, IFC, and the EU Commission. According to the relevant governmental bodies, Georgia has ratified the following international agreements.
C. Economic and Sector Background
After the death of Prime Minister Zhurab Zhvania last February, it is likely that the political scene will be dominated by President Mikhail Saakashvili. It is expected that the Georgian authorities will quickly implement milder economic reforms, but the more painful structural reforms may be subject to delays. The annual average growth in real GDP is expected to be 10%, mainly due to a rapid rise in investment linked to the construction of two major pipelines.1
In the first three quarters of 2004, the Real GDP growth was 8.4% year on year. The industrial sector posted growth of 12.1% year on year during the same period, this as a result of the strong performance of the processing sub sector, which accounts for nearly 65% of total industrial output. Wine production grew strongly because of the doubling of the grape harvest in late 2003 (grapes are picked in the end of the calendar year and processed in the next). It must be mentioned that the industrial output is largely dependent on the activity of only 50 industrial enterprises, which are responsible for over 75% of the total output. The development of SMEs, which account for only 17% of industrial activity, has been hampered by unfavourable legislation and widespread corruption.
The agricultural sector saw a 10% decrease year on year in the first nine months of 2004, due mainly to unfavourable weather conditions. The sector also continues to suffer from a shortage of credit, which has prevented farmers from purchasing high-quality seeds and fertilizers, and from the small size of land plots, which prevents economies of scale. This is one of the major problems in the wine sector and has caused a decrease in the overall territory of vineyards since the collapse of the Soviet Union. In 1990 there were 112,600 hectares of vineyards, whereas in 2000 there were 60,500 hectares. In 2004 grape production fell by one-third year on year, to 140 m tonnes.2 This will have adverse implications for the Georgian wine production in 2005.
1 Data from EIU’s February 2005 report on Georgia. 2 Data from FAO.
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Grape Production in m tonnes
0
50
100
150
200
250
2000 2001 2002 2003 2004
Grape Production (mtonnes)
Source: FAO
According to the CERMA baseline study of the viticulture and wine sector in Georgia conducted in 2001 under FAO Guidance, less than 10% of Georgia grape production was industrially processed in 1999 (compared with 60% in 1990).
Among the key players in the sector is Georgian Wine and Spirits, majority owned by Pernod Ricard. It is currently a leader in the market, with a processing capacity of 30,000 tonnes of grapes and storage capacity of 20 million litres of wine. GWS is the biggest exporter of Georgian wine to foreign markets, particularly Russia, Ukraine, and the EU.
Other quality producers with an increasing share in domestic and foreign markets are Telavi Wine Cellar, Teliani Valley, and Tbilvino.
Over the last three years the sector has greatly improved. Modern winemaking equipment has been purchased, international consultants have been hired, training and know-how of local winemakers has improved, etc. Most of these improvements have benefited winemaking, but much still needs to be done in the vineyards to improve grape quality and vine training. At the same time, an encouraging factor is the increasing number of new vineyards planted, as well as private nurseries established.
However, the problem of counterfeit wine still continues and has an enormous negative impact on the industry, both nationally and internationally. According to several officials interviewed during the FAO visit to the country, while Georgian wine exports are estimated at around 26 million bottles, only 5 million are believed to be of Georgian origin. The problem is even more serious when considering wines from well-known geographical appellations. According to local officials, 17 million bottles of Kindzmarauli and Khvanchkara are exported, 90% of which are counterfeit. During this initial assignment, the FAO mission has identified six major constraints connected with counterfeit wines and implementation and control of the regulations:
size and boundaries of areas of Geographical Indications difficulties tracing wine movements within Appellation areas laboratory certifications lack of regulation regarding control of imported wines protection of Appellations of Origin lack of capacity to enforce the law
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D. Overview of the current wine law and the scope for improvement
The vine and wine sector in Georgia is currently regulated according to the following laws, decrees and normative acts:
Law of Georgia on Wine and Vine adopted on February 4, 20031 (See Appendix 2)
With the following normative acts, enforcement starting May 1, 2003:General Rules and Regulations of Grape Wine ProductionRules of Recording Technological ProcessesRules of Compulsory Notification of Activities Relating to the Production and Selling of Commodity Output in the Fields of Viticulture and Winemaking
Followed by the adoption in August 2003 by the following normative acts:Regulation for the Technical and Phytosanitary Control of the Production of Mother Vine Plantations, Grafting Material and Engrafted SeedlingsCertification Rules for Vine Grafting Material and Engrafted SeedlingsRules for Special Zones and Grape Growing RegionsRules for Removal of Grapes from the Zone in order to Produce Wines with the Denomination of OriginRules for controlling the labelling of Alcoholic Drinks of Grape Origin
Followed by the adoption on January 1, 2004 by the following normative acts:Certification System of Alcoholic DrinksRules for Certification of Alcoholic DrinksRules for Accrediting of Testing LaboratoriesRules for Issuing Certificates of OriginRules for Wine Sorting
Law of Georgia on Geographical Indications and Denomination of origin of products adopted on July 4, 2002 (See Appendix 4)
Followed by the adoption on February 28, 2002, of Decree n°88, “Regulation on Identification, Registration, Use and Control of Appellations of Origin of Wine and Wine Brandy”
Followed by the adoption on February20, 2003, by the following normative acts:Procedure for specifying and examining the information necessary for registration of denomination of origin of wine and wine brandyProcedure for state control over production of wine and wine brandy with denomination of origin
Adoption on February 11, 2003, of the Statute of the Legal Entity of Public Law: State Wine and Vine Department SAMTREST (See Appendix 5)
These Laws and Normative Acts were adopted in order to provide a legislative environment inspired by EC Wine Regulations, and in particular by the Appellation of Origin system.
1 The Law was adopted following an FAO Project (TCP/GEO/8922) conducted in 2000 and 2001 with the objectives of establishing “A guiding policy and strategy for viticulture sector rehabilitation” as well as producing a “Regulatory framework – updating and completing the wine and viticulture sector legislation to meet agreed international standards for definitions, labelling and guarantee of origin, and monitoring compliance with established norms”.
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In accordance with these regulations and based on a terroir analysis made during Soviet times, several viticultural areas within Georgia have been selected by the Scientific Research Institute of Georgia to qualify for wine grape production:
Eastern Georgia (including Inner and Outer Kakheti as well as Lower and Inner Kartli); Western Georgia (including Upper, Central and Lower Imereti, Lower Racha, and Lehkhumi); Black Sea Coastal area (including Guria, Ajara, Samegrelo, and Abkhazia).
E. Size and boundaries of areas of Geographical Indications (Gis)
Inside the three major Georgian viticultural areas previously mentioned, 18 “microzone” Geographic Indications have been precisely identified. Eight of them have begun the process of registration through Sakpatent, and two vineyard areas of Geographical Indications are fully mapped with detailed definitions of borders. (Funding for this work was provided by GTZ.)
According to the law, “the areas and grape-growing provinces are defined by the Georgian Scientific Research Institute of Horticulture under a procedure established by the Ministry of Agriculture”. Results of the works conducted by the Institute have lead to some microtones having a very limited size of vineyards: for example, the size of the Kchanchkara Geographical Appellation of Origin defined by the Institute is 400 hectares, of which 40% is currently planted with vines; the size of Kindsmarauli is 300 hectares, 35% of which is currently planted with vines.
The limited number of hectares of vineyards in some Appellation of Origins automatically creates scarcity of supply of grapes that could be used to process wines within the boundaries of the Appellation.
Such a situation is common for all countries that have adopted a system of appellation and participate in increasing the value of the wines produced.
However, for the system to be efficient, a high level of control should be implemented to prevent fraud and production of counterfeit wines, i.e., wines baring the names of these appellations but with grapes from other regions.
F. Difficulties to trace wine movements within Appellation areas
According to the Law of Georgia on Vine and Wine:
f.1 Up to 15% of the grapes or wine produced outside the appellation area but within the same (grape growing) area may be used when producing place of origin named wines.
f.2 The grape processing and winemaking are also allowable outside the specific area but within the same grape growing area, and the wine bottling outside the given grape-growing area is also allowed but within Georgia.
This flexibility granted by the law to Georgian producers regarding blending, processing, and bottling of Appellation of Origin wines defers from the EC Regulation on Appellation of Origins and reflects more of a “New World” approach.
When taking into consideration the total size of the Georgian vineyard and the organization of the wine industry (where processing and bottling companies are generally not located close to vineyards), this flexibility should be regarded as compulsory.
However, because of the lack of control on bulk wine transportation enforced by SAMTREST, the implementation of the law is difficult to verify. This results in two major frauds:
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f.2.1 More than 15% of the grapes used to produce wines bearing Appellation of Origin names originate from outside the area.
f.2.2 Wines bearing Georgian Appellation of Origin names are bottled outside of Georgia (Moldova, Bulgaria, Spain, Greece, etc.).
G. Laboratory certifications
Only one laboratory is currently issuing wine analysis certificates in accordance with OIV standards: the laboratory of the Scientific Research Institute in Tbilisi.
Accuracy of these analyses could be questioned due to a lack of up-to-date equipment, in addition to the preferential treatment given to some companies.
Under GTZ funding, a new state-of-the-art laboratory located in Tbilisi has been established and should be operational by the end of June 2005. Accreditation by EU and other international organizations should follow. If proper management is provided, this new establishment should help to regularize the issuance of certificates of analysis for export.
H. Lack of regulation regarding control of imported wines
Current legislation does not address the issue of imported bulk wines (originating from the EU, South America, Moldova, Bulgaria, etc.) that are re-exported from Georgia, bearing Georgian appellations of origin.
To cope with such a problem the following issues need to be addressed:
h.1 Control of bulk wines entering Georgian territoryh.2 Traceability and control of transport within Georgian territoryh.3 Control of bottling or any transformation conductedh.4 Control of export (quantity, quality, and denominations)
It is the FAO Mission’s recommendation to analyze this issue in further detail and suggest necessary amendments.
I. Protection of Appellations of Origin
Currently, a certain number of the 18 appellations of origin included in the Georgian Wine and Vine Law are neither fully registered at SAKPATENTI nor at the international level.
Taking advantage of this lack of protection, some private companies have even registered these names as trademarks.
However, there are a number of international instruments that provide for the protection of GIs. These include: the Paris Convention for Protection of Industrial Property, the Madrid Agreement for the Repression of False or Deceptive Indications of Source on Goods, the Lisbon Agreement on the Protection of Appellations of Origin and their Registration, and TRIPs. Georgia is party to each of these agreements. In addition, there are a number of bi-lateral agreements under consideration with Ukraine, the Russian Federation, and the EU. Finally, individual commercial entities have taken action to protect their brand names under trademark legislation abroad and have sought to protect Georgian wine appellations through registration of such names as trademarks.
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The Paris Convention for the Protection of Industrial Property
According to its Article 2(1), the Paris Convention applies to the widest range of industrial property, including “indications of source and appellations of origin and the repression of unfair competition”. ‘Industrial property’ is defined at Article 1(3) to include “all manufactured or natural products, for example, wine, grain, tobacco leaf, fruit, cattle, minerals, mineral waters, beer, flowers, and flour”.
The Paris Convention approaches the issue of GI protection from the angle that it constitutes unfair competition. According to Article 10bis unfair competition arises when acts done by a competitor create confusion, when a competitor uses false allegations in the course of trade so as to discredit the establishment, the goods, or the industrial or commercial activities, of a competitor or when indications or allegations mislead the public as regards the “nature, the manufacturing process, the characteristics, the suitability for their purpose, or the quantity, of the goods”. The use of the word ‘characteristics’ in Article 10bis means that only the importation of products containing “false” indications of geographic origin are prohibited. Geographic names that are merely misleading are not disallowed.
Article 9 provides the remedies available in the event of infringement of marks and trade names. These remedies are seizure of all goods unlawfully bearing a trademark or trade or in the event that the law of a particular country does not allow seizure, then it shall be replaced by a prohibition of importation of the offending products. Article 10(1) provides that the remedies in Article 9 shall apply in “cases of direct or indirect use of a false indication of the source of the goods or the identity of the producer, manufacturer, or merchant”.
In the overall sense, the Paris Convention only offers very limited protection of GIs. In addition, despite its many signatories totalling 169 as at April 2005, the Paris Convention has had little impact in the protection of GIs because it has to be implemented in national law, something which many of its signatories did not do. As discussed below, other international agreements provide more direct opportunities to enforce recognized Geographical Indications and wine appellations. In addition, other agreements contain a wider scope in the definition of geographical indications and generally establish a lower burden of proof in any legal action that seeks to enforce the protection granted.
Signatories of the Paris Convention include countries such as Albania, Croatia, Czech Republic, France, Germany, Hungary, Israel, Italy, Latvia, Moldova, Romania, the Russian Federation, Slovakia, Spain, Macedonia, and Ukraine.
The Madrid Agreement for the Repression of False or Deceptive Indications of Sources on Goods
The agreement states its purpose in its title, that is, the “repression of false or deceptive indications of sources on goods”. Despite the prominence of the phrase ‘indications of source’ in the agreement, it is not defined. According to Article 1(i) of this agreement, “all goods bearing a false or deceptive indication by which one of the countries to which this Agreement applies, or a place situated therein, is directly or indirectly indicated as being the country or place of origin shall be seized on importation into any of the said countries”. In the event that seizure is not possible under national law, the agreement provides that import prohibitions should be applied.
Article 4 of the Madrid Agreement is most instructive in its categorical statement that geographical indications of wines shall not be used as generic terms. It states: “The courts of each country shall decide what appellations, on account of their generic character, do not fall within the provisions of this agreement, regional appellations concerning the source of products of the vine being, however, excluded from the reservation specified by this Article”. This agreement is therefore stronger than the Paris Agreement regarding the extent of protection it gives to geographical indications on wines.
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As of April 2005, the agreement had 34 contracting parties which include Algeria, Belarus, Bulgaria, Croatia, Czech Republic, France, Germany, Hungary, Italy, Romania, Slovakia, Spain, the Russian Federation, and Ukraine. It has also not attained a high degree of popularity, partly owing to the perception that its provisions on GIs protection are too exacting.
The Lisbon Agreement on the Protection of Appellations of Origin and Their Registration
This agreement offers the strongest protection of GIs. It was negotiated in keeping with Article 19 of the Paris Convention for the protection of Industrial Property. It applies the concept of “Appellation of Origin” (as opposed to the concept of Geographical Indication used in the TRIPs Agreement) borrowed from French law and defined as “the designation of a country, a region, or a locality that serves to indicate that a product originates from that place and owes its quality or characteristics to its geographical surroundings, including natural and human factors”. It should be noted that the definition includes not only “human factors” but also “natural factors”. The idea is therefore that only those products manufactured according to local traditions by local people qualify for protection under the protection of geographical appellations of origin.
In Article 2 of the Lisbon Agreement, “ ‘appellation of origin’ means the geographical name of a country, region, or locality, which serves to designate a product originating therein, the quality and characteristics of which are due exclusively or essentially to the geographical environment, including natural and human factors”. As in the French Code de la consommation, this definition includes both the human and natural factors. According to Article 3, the agreement ensures the protection of appellation of origin against usurpation or imitation, even if the true origin of the product is indicated or if the appellation is used in translated from or accompanied by terms such as “kind”, “type”, “make”, “imitation”, or the like. The main objective is to guarantee the authenticity and origin of the raw materials and the traditional practices of the communities involved, but not, as in the Paris Convention, to approach the issue from the view of unfair competition. A direct result of the approach of the Lisbon Agreement and the resulting text is that the burden of proof is lighter, and thus a GI is more easily infringed upon.
According to the Lisbon Agreement, an appellation of origin must first be protected under national law, after which notification is sent to the World Intellectual Property Organization (WIPO). It is WIPO’s duty to notify all the other members of the Lisbon Agreement of this protection. All participating countries must oblige with their own protection of the appellation of origin upon notification, unless they formally object within the period of one year. To date, Georgia has registered eight wine appellations and two mineral waters. These registrations have recently been published by the International Bureau of Intellectual Property and are now awaiting possible objections from other parties to the Agreement. Should any parties object, Georgia will have the opportunity to challenge the objection.
Article 6 is drastic in the extent of protection. It states that “an appellation which has been granted protection in one of the countries [...] cannot, in that country, be deemed to have become generic, as long as it is protected as an appellation of origin in the country of origin”. The agreement further provides a two-year phase-out period for appellations of origin which conflict with TMs in cases where the TM was registered prior to the appellation of origin in violation of the “first in time, first in right” rule. According to Article 5, “If an appellation which has been granted protection in a given country pursuant to notification of its international registration has already been used by third parties in that country from a date prior to such notification, the competent Office of the said country shall have the right to grant to such third parties a period not exceeding two years to terminate such use, on condition that it advises the International Bureau accordingly during the three months following the expiration of the period of one year”. This is relevant in the case of Georgia, where it has been reported that Georgian wine appellations have been registered as trademarks in other wine producing countries. The Lisbon Agreement would thus provide for the gradual phase-out of such trademarks.
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Importantly, the agreement provides extensive opportunity to enforce the protection of appellations once granted under its terms. Article 8 on Legal Proceedings provides that “Legal action required for ensuring the protection of appellations of origin may be taken in each of the countries [...] under the provisions of the national legislation; 1) at the instance of the Competent Office or the public prosecutor, and 2) by any interested party, whether a natural person or legal entity, whether public or private”. “Interested parties” would include any winemaker in Georgia who is entitled – according to the relevant law of Georgia – to use a Georgian wine appellation and seeks to counter infringements of the appellation. Government institutions such a SAMTREST, the government regulator of the wine sector, or SAKPATENTI, the para-statal intellectual property rights institution, would also have standing before the courts of the parties to the agreement, as would sector organizations established with the purpose of furthering the interest of (parts of) the wine sector as a whole.
In sum, the Lisbon Agreement gives the greatest protection to appellations of origin, and considers them superior to trademarks. Although relatively few countries, 23 in total, are parties to the agreement, the parties to the agreement do include relevant countries where potentially counterfeit Georgian wines originate and/or are sold. In addition to Georgia, Algeria, Bulgaria, France, Hungary, Israel, Italy, Moldova, Portugal, the Czech Republic, Serbia and Montenegro, and Slovakia are parties to the Agreement.
The TRIPs Agreement
The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) is the most comprehensive trade agreement on intellectual property rights (IPRs). Because of its wide membership, the scope of application is the widest of all the treaties described here, although it should be noted that the Russian Federation and Ukraine are not yet subject to the treaty provisions. The Russian Federation is expected to join the World Trade Organization in two years time, and the Ukraine is also in the process of acceding, although there is no specific information as to an exact timetable. Other present members include essentially all countries of origin of potential counterfeit Georgian wines, except Montenegro, Serbia, and Algeria. The treaty covers all major IPRs, including trademarks and GIs. At Article 22.1, the TRIPs Agreement defines GIs as “indications which identify a good as originating in the territory of a Member, or a region or locality in that territory, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographical origin”.
The provision mentions certain criteria that should be considered, such quality, reputation, or other characteristics, and any of the three are sufficient for eligibility. Quality would refer to some positive attributes, reputation would refer to favourable impression by users or consumers, and ‘other characteristics’ could include physical attributes such as colour. As a link between the product and its origin, the provision requires that the product be “essentially attributable to its geographical origin”. This language would appear to provide some flexibility, in the sense that “essentially attributable” is not only based on geographical connection (for example, quality of a product derived from the soil or climatic conditions of an area), but perhaps also by reputation.
Article 22.2 provides as follows:
In respect of geographical indications, Members shall provide the legal means for interested parties to prevent: (a) the use of any means in the designation or presentation of a good that indicates or suggests that the good in question originates in a geographical area other than the true place of origin in a manner which misleads the public as to the geographical origin of the good; (b) any use which constitutes an act of unfair competition within the meaning of Article 10bis of the Paris Convention (1967).
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This provision outlines the basic standard of protection for GIs. It also has inherent interpretive flexibility. The phrase “misleads the public” is comparable to the trademark law concept of “consumer confusion” and “likelihood of confusion” as found for example in Article 16 of the TRIPs Agreement. Here the meaning of “public” is open to various interpretations. It could mean, for example, the ‘wider public’ or the specific habitual consumers of a particular product. Further, the circumstances in which a consumer will be confused as to the geographical origin of product in practice are also not easy to establish legally.
Article 22.2(b) refers to “any use which constitutes an act of unfair competition within the meaning of Article 10bis of the Paris Convention”. This provision in the Paris Convention refers to the doctrine of ‘unfair competition’, which may be read as importing into TRIPs the common law and civil law causes of action for GIs.
Importantly, Article 23 provides for a higher level of protection for GIs of wines and spirits. Article 23.1 states as follows:
Each Member shall provide the legal means for interested parties to prevent use of a geographical indication identifying wines for wines not originating in the place indicated by the geographical indication in question or identifying spirits for spirits not originating in the place indicated by the geographical indication in question, even where the true origin of the goods is indicated or the geographical indication is used in translation or accompanied by expressions such as “kind”, “type”, “style”, “imitation” or the like.
The article establishes the basic obligation to provide for ways and means, i.e. “legal means”, to enforce the protection granted by the agreement. The provision provides for flexibility with respect to the mechanisms for protection, since “the legal means” can be any method of protection. Legislation, regulations, administrative mechanisms, general principles of law or even principles of common law such as unfair competition or passing off, are all included within the scope of conceivable ‘legal means’ of protection. The TRIPS Agreement prescribes a number of minimum standards for domestic legal procedures to ensure that IPRs, including GIs, are effectively enforced for both national and foreign right-holders. National procedures must be fair and equitable, must not unnecessarily complicated or costly, and must not entail unreasonable time-limits or unwarranted delays. Members must also ensure judicial review of initial judicial or final administrative decisions. Finally, members must provide for criminal procedures and penalties at least in cases of willful counterfeiting or piracy on a commercial scale. Similar to the Lisbon Agreement, protection is accorded even in circumstances when use of a GI might not mislead the public or even if it is accompanied by expressions such as “kind”, “type”, “style” or “imitation”. Similar to the Lisbon Agreement, the protection of GIs for wines and spirits is thus significantly higher. The holder of a right does not have to show that there is a likelihood of confusion or that there is unfair competition; the use of an identical or similar indication of origin is itself an infringement. Thus, Article 23 increases protection for GIs of wines and spirits beyond what is contained in Article 22.3, which does not prohibit incorrect GIs if they are not misleading to the public.
Article 24 spells out exceptions to the rule, that is, situations when a WTO member may decide not to protect GIs. It allows persons who have used a GI in a continuous manner with regard to the same or related goods or services in the territory of that member either (a) for at least 10 years preceding 15 April 1994 or (b) in good faith preceding that date. Further, in case a GI is synonymous with the customary name of a grape variety existing in the territory of that member as of the date of entry into force of the WTO Agreement, that Member does not have to protect that GI. Hence, generic GIs cannot be protected. A WTO member can, however, waive this provision and grant protection to generic GIs anyway. In France for example, a GI can never be generic. According to Article 24.9, there is no obligation to protect geographical indications which cease to be or are not protected in their country of origin, or which have fallen into disuse in that country. Finally, and relevant for Ukraine and the Russian Federation as important markets for Georgia, the TRIPS Agreement provides for transitional arrangements for countries in the process of transition from a centrally-planned to a market
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economy. Such countries must bring their legislation and practices into conformity within a transitional period of five years, provided they plan a structural reform of their IP system.
Bilateral agreements
The agreements above, their membership as well as the means of protection reveal a hiatus regarding the protection of Georgian appellations. As mentioned, the Russian Federation and Ukraine, both important markets for Georgian wines and reportedly countries where counterfeit ‘Georgian’ wines originate, are not members of WTO, nor are these countries party to the Lisbon Agreement. In order to ensure that the Russian Federation and Ukraine recognize Georgian wine appellations that are enforceable for interested parties, Georgia has proposed bilateral agreements on the subject. There is no agreement on any final text yet with either of the two countries, nor is it clear whether any text will eventually be adopted.
The agreement with Ukraine, if signed, would provide for the legal recognition of wine appellations, for an annual exchange of private entities which are entitled to use such names, prohibit the registration of Georgian wine names as trademarks but would recognize the Georgian ownership of the names in the public domain, and would allow interested parties to initiate court procedures to protect wine appellations. A similar proposal will be made to the Russian Federation, although it appears more difficult to initiate negotiations with the Russians. Another problem is that Russia applies a rather different concept of Geographical Indications. The registration of GIs would have a ten year maximum validity, could only be registered by bodies established under Georgian law – but would explicitly not include governmental institutions (SAMTREST would, however, not be considered a governmental body as it is established as a separate para-statal entity) – and would entail a system of reciprocity whereby Russian companies/entities could register Russian appellations and GIs in Georgia. The latter obstacle would appear to be only of a formal nature – a change in the Georgian law would be required – but would have little practical relevance as Russia has very few, if any, wine appellations.
It should be noted that the absence of any enforceable legal framework regarding the Russian Federation does not mean that there is no cooperation at all between the two countries on the issue. In line with the proposed agreement as described here and on a more informal basis, the Russian and Georgian IPR authorities already exchange information on an annual basis, whereby Georgia communicates recognized Georgian wine appellations to the Russian authorities. On the basis of this information, IPR authorities do no longer allow the registration of Georgian appellations as trademarks.
Georgia is also in the process of talks with the European Union regarding EU recognition of Georgian wine appellations with a view to signing an agreement on the protection of appellations of origin for wine and other alcoholic beverages. The process includes technical meetings to assess the compatibility of Georgian legislation and administrative procedures with EU standards.
Other means of protection
The larger Georgian winemaking companies are themselves taking action to protect their intellectual property rights, mainly through the registration of trademarks in foreign markets. GWS for example, the largest Georgian wine and spirit company, owns several brand names both in Georgia and in the Russian Federation under Russian trademark legislation and the same applies to Telavi Wine Cellar, which has a very active approach to the registration of brand names abroad. GWS has been successful in defending its trademarks in Moscow on a few occasions, although court procedures in Russia are generally described as time-consuming, expensive and rather unpredictable. GWS has likewise resorted to the registration of Georgian wine appellations as trademarks in the EU, using EU partner-companies to register such names on their behalf as a defensive measure to ensure the early protection of Georgian names. These actions would also prevent overlap between Georgian appellations and trademarks. Once appropriate mechanisms are in place, GWS intends to hand over the EU trademarks
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which it does not seek to keep for itself alone. Actions of this nature may not immediately serve the public Georgian interest, but is understandable in view of the fact that Moldovan companies, for instance, have reportedly registered Georgian geographical indications as trademarks in Russia and the Czech Republic.
Issues to be addressed:
Some issues remain to be addressed in order to arrive at a specific action plan. From the perspective of the legal analysis, more study is required regarding the overlaps between trademarks and geographical indications, both domestically and internationally. Secondly, improvements of the Georgian wine law have been discussed in other parts of this report and concrete proposals will have to be developed on the basis of further discussions with stakeholders in Georgia. This would impact on the development of the Georgian wine sector by improving its management and control, but may also have repercussions on the negotiations with the EU.
In terms of the action plan, the available enforcement actions and remedies under the various international agreements should be further specified and summarized in a matrix identifying exactly which actions could be available in the different markets where Georgian counterfeit wines are sold and the countries where these wines originate. A matrix would also identify the actors who could take such action.
J. Lack of capacity to enforce the law
According to the Law of Georgia on Wine and Vine, the regulation of the wine and vine sector is under the authority of SAMTREST, a state owned entity subject to public law. This entity is headed by a Chairman appointed and dismissed by the Minister of Agriculture and Food of Georgia. The Ministry of Agriculture and Food of Georgia oversees the activities of SAMTREST.
In Appendix 5, field of actions and major functions of SAMTREST are listed, among which are the following:
Protection of the interests of the state, producers and customers; defending the consumer market from low quality and fraud production; exclusion of the possibility of unfair competition and monopoly at each stage of production and supply.
To contribute to elimination of using false denominations of origin and geographical indications, as well as trade marks throughout Georgia and outside its borders.
To handle the vast scope of work defined, the entity has 23 employees, most of whom are engaged in other activities to generate additional personal income.
It is obvious that the number of employees is too limited to enforce the laws governing the sector and implement the controls stated in the different decrees and normative acts.
Issues to be addressed:
Funding of SAMTREST and capacity to enforce the regulations should be analyzed including the possibility of sub-contracting with other state or private agencies. A concrete list of functions, technical and human needs, and funding still needs to be established.
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Membership of WIPO treaties:
Lisbon Agreement (Appellations of Origin), since September 2004
According to the SAKPATENTI Director General, David Gabunia, in April 2005, Georgia received an acceptance of registration of 16 main wine appellations under the Lisbon Agreement.
WIPO Convention, since December 1991 Paris Convention (Industrial Property), since December 1991 Berne Convention (Literary and Artistic Works), since May 1995 PCT (Patents), since December 1991 Madrid Protocol (International Registration of Marks), since August 1998 Hague Agreement (International Deposit of Industrial Designs), since August 2003 Nice Agreement (International Classification of Goods and Services), since February 2003 WCT (WIPO Copyright Treaty), since March 2002 WPPT (WIPO Performances and Phonograms Treaty), since May 2002
WTO
Member and Signatory to the TRIPS Agreement, since June 2000
Membership of other bodies/treaties: BSEC
Member of BSEC, since June 1992
The substantive provisions of the international agreements as described here provide the basis for the protection of Georgia’s wine appellations in the international arena. The agreements provide for the protection of recognized Geographical Indications for goods, and specifically award a higher level of protection to wines. Generally, the enforcement of the rights that are derived from the international treaties relies on domestic legislation. However, not all international agreements can be invoked by Georgia, as not all relevant countries are parties to all relevant treaties. For example, Russia is not yet a member of WTO yet and has not signed the Lisbon Agreement, which means that those agreements are not binding on Russia and action cannot be taken on the basis of those agreements. On the other hand, many relevant markets for Georgian wines and countries where counterfeit wines originate have signed the Lisbon Agreement, including Moldova, Czech Republic, Bulgaria, and Israel. An overview of the relevant international agreements, including an analysis of the various levels of protection is provided in Appendix 3.
Following a detailed analysis of (1) the applicability of treaties and agreements in various markets and/or countries where counterfeit wines originate, and (2) the means of enforcement that are available at the national level in view of domestic legislation, a menu of options may be developed for the most appropriate and effective means to protect Georgian wine appellations in relation to the markets where counterfeit wines are sold and the countries where these originate.
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Appendix 1 to Annex 2
Geographic Indications1
What is a geographical indication?
A geographical indication is a sign used on goods that have a specific geographical origin and possess qualities or a reputation that are due to that place of origin. Most commonly, a geographical indication consists of the name of the place of origin of the goods. Agricultural products typically have qualities that derive from their place of production and are influenced by specific local factors, such as climate and soil. Whether a sign functions as a geographical indication is a matter of national law and consumer perception. Geographical indications may be used for a wide variety of agricultural products, such as, for example, "Tuscany" for olive oil produced in a specific area of Italy (protected, for example, in Italy by Law No. 169 of February 5, 1992), or "Roquefort" for cheese produced in France (protected, for example, in the European Union under Regulation (EC) No. 2081/92 and in the United States under US Certification Registration Mark No. 571.798).
Can geographical indications only be used for agricultural products?
The use of geographical indications is not limited to agricultural products. They may also highlight specific qualities of a product which are due to human factors that can be found in the place of origin of the products, such as specific manufacturing skills and traditions. That place of origin may be a village or town, a region or a country. An example for the latter is "Switzerland" or "Swiss," which is perceived as a geographical indication in many countries for products that are made in Switzerland and, in particular, for watches.
What is an appellation of origin?
An appellation of origin is a special kind of geographical indication, used on products that have a specific quality that is exclusively or essentially due to the geographical environment in which the products are produced. The concept of geographical indication encompasses appellations of origin.
What does a geographical indication do?
A geographical indication points to a specific place or region of production that determines the characteristic qualities of the product that originates therein. It is important that the product derives its qualities and reputation from that place. Since those qualities depend on the place of production, a specific "link" exists between the products and their original place of production.
Why do geographical indications need protection?
Geographical indications are understood by consumers to denote the origin and the quality of products. Many of them have acquired valuable reputations which, if not adequately protected, may be misrepresented by dishonest commercial operators. False use of geographical indications by unauthorized parties is detrimental to consumers and legitimate
1 Source: World Intellectual Property Organization (WIPO) - http://www.wipo.int/about-ip/en/about_geographical_ind.html
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producers. The former are deceived and led into believing to buy a genuine product with specific qualities and characteristics, while they in fact get a worthless imitation. The latter suffer damage because valuable business is taken away from them and the established reputation for their products is damaged.
What is the difference between a geographical indication and a trademark?
A trademark is a sign used by an enterprise to distinguish its goods and services from those of other enterprises. It gives its owner the right to exclude others from using the trademark. A geographical indication tells consumers that a product is produced in a certain place and has certain characteristics that are due to that place of production. It may be used by all producers who make their products in the place designated by a geographical indication and whose products share typical qualities.
How is a geographical indication protected?
Geographical indications are protected in accordance with national laws and under a wide range of concepts, such as laws against unfair competition, consumer protection laws, laws for the protection of certification marks or special laws for the protection of geographical indications or appellations of origin. In essence, unauthorized parties may not use geographical indications if such use is likely to mislead the public as to the true origin of the product. Applicable sanctions range from court injunctions preventing the unauthorized use to the payment of damages and fines or, in serious cases, imprisonment.
How are geographical indications protected on the international level?
A number of treaties administered by the World Intellectual Property Organization (WIPO) provide for the protection of geographical indications, most notably the Paris Convention for the Protection of Industrial Property of 1883, and the Lisbon Agreement for the Protection of Appellations of Origin and Their International Registration. In addition, Articles 22 to 24 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) deal with the international protection of geographical indications within the framwork of the World Trade Organization (WTO).
What is a "generic" geographical indication?
If a geographical term is used as the designation of a kind of product, rather than an indication of the place of origin of that product, this term does no longer function as a geographical indication. Where that has occurred in a certain country over a substantial period of time, that country may recognize that consumers have come to understand a geographical term that once stood for the origin of the product - for example, "Dijon Mustard," a style of mustard originally from the French town of Dijon - to denote now a certain kind of mustard, regardless of its place of production.
What is WIPO's role in protection geographical indications?
WIPO is in charge of the administration of a number of international agreements which deal partly or entirely with the protection of geographical indications (see, in particular, the Paris Convention for the Protection of Industrial Property, and the Lisbon Agreement for the Protection of Appellations of Origin and Their International Registration). Furthermore,
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through the work of the Standing Committee on the Law of Trademarks, Industrial Designs and Geographical Indications, made up of representatives of member States and interested organizations, WIPO explores new ways of enhancing the international protection of geographical indications.
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Appendix 2 to Annex 2
Law of Georgia on Vine and Wineas of 4 February 2003
translated and validated in TECHINFORMI
Law of Georgia on Vine and Wine
(As of 4 February 2003)
Georgia belongs to the area of quality and high-quality viticulture and winemaking.
The objective of the Law of Georgia on Vine and Wine is all-round promotion of viticulture and wine-making as of the country's priority industry (30.09.98 No 1604); development, production and marketing of competitive grape wines and other alcoholic beverages of grape origin, and protection of the consumer market from counterfeited and substandard products.
Chapter I. General Provisions
Article 1
The legal basis for the production and marketing of vines, grapes, wines and other alcoholic beverages of grape origin is the Constitution of Georgia, this Law and other normative acts.
Article 2
This Law extends to natural and legal persons, whose economic activity comprises the production, marketing, export and import of commercial output in the sphere of viticulture and wine-making, including alcoholic beverages of grape origin. (04.07.2002 N1635)
Chapter II. Definition of Terms
Article 3
The terms used in this Law have the meaning as follows:
Vineyard – a vine plantation; Industrial vineyard – a vine plantation of the variety established under this Law for a concrete
zone which grapes are used mainly for marketing or industrial purposes; Special-purpose vineyard – a plantation arranged for the purpose of research, education,
collection, selection, and variety trial; Hobby vineyard – a vine plantation arranged on a household or garden plot, where variety
diversity is admissible. The grapes harvested in a hobby vineyard are employable for direct consumption and to them the requirements to the industrial vineyard established under Georgian legislation do not apply;
Standard vine assortment (standard assortment) – a list of vine varieties tested and standardized on the territory of Georgia;
Aboriginal vine variety – a vine variety of local origin; Introduced vine variety – a vine variety imported to and tested in Georgia;
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Clone – the shoot from a single variety vine plantation being the carrier of a distinguished qualitative feature (crop capacity) or features (high productivity, high sugar content, resistance to causal organisms, etc.);
Vitis vinifera – the vine family species comprising the European and Asian grape vine varieties;
Seedling – a one- or two-year young engrafted vine intended for planting and obtained through vegetative reproduction;
Standard seedling – the vine planting material, grafted or engrafted, complying with the standard-stipulated requirements;
Certified seedling – a top quality phytosanitary sound engrafted or grafted seedling complying with standard-stipulated requirements;
Mother plantation of rootstocks – the plantation of phylloxera-resistant varieties of a hybrid vine species which is intended for producing the vine reproduction mother material;
Mother plantation of scions – the vine plantation intended for producing the vine reproduction scion material;
Grape scion – a one-year scion part being used for rooting or the budding (grafting) material production;
Rootstock – a one-year phylloxera-resistant differed vine shoot applicable for grafting; Testing – the investigation of a vineyard, mother material, and nursery to generate and
reproduce biologically safe, variety uniform (pure) plants; Engrafted seedling – a seedling produced as a result of a one-year scion part or bud rooting; Grafted seedling – a seedling produced as a result of the stock bud grafting which is used for a
vineyard planting; Viticulture area – an extensive geographical territory of a country with favorable agro-
ecological conditions for cultivating vine; Viticulture sub-area – a part of the viticulture area differing from other sub-areas of the same
area by its agro-ecological conditions; Specific viticulture area (specific area) – the country's viticulture area, sub-area or part thereof
where the special quality, reputation and/or other indicators of the produced grapes or products of their processing are fully of mainly conditioned by natural conditions of the area and by special qualities of the vine species being revealed only under such agro-ecological conditions;
Grape – the vine fruit, ripe or slightly withered; Crush – the crushed grape mass with or without stems; Marc – the pressed crush; Grape must – a liquid product obtained by processing whole grapes or unfermented crush; Mistelle – a fortified grape must which actual alcoholic content by volume should not be less
than 16%; Concentrated grape must – the non-caramelized thickened grape must with an extract content
increased by partial dehydration. Its sugar content by volume must not be less than 50 percent and the actual alcoholic content less than one percent;
Grape juice – a liquid product obtained by employing the established in wine-making practices and intended for direct human consumption whose actual alcoholic content by volume shall not exceed one percent;
Machari – a green wine with incomplete alcoholic fermentation; Wine - a product obtained through a complete or partial alcoholic fermentation of only the
grape must or crush; Table wine – the wine to which the requirements to the wines as per subparagraphs "a.a",
"a.b" and "a.c" of this Article established under this Law do not apply and the actual alcoholic content of which shall not be less than 9 percent;
Grape-growing province – the country grape-growing area, sub-area or their combined place where a province wine is made;
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Province wine – a wine made in any grape-growing province of the country, which implies the procurement and processing of grapes in the province the specific quality, standing and/or other properties of which are associated with the province's natural climatic and soil conditions, and which bears the geographic or historic names of the province that cannot repeat the place-of-production or the place-of-origin denomination controllable wines, or make possible to confuse them;
Place-of-origin denomination wines – the place-of-origin denomination and the place-of-origin denominational controllable quality wines made in a specific area;
Place-of-origin denomination quality wine made in a specific area - the wine made in a specific grape-growing area (grapes procuring, production, and winemaking) with its characteristic stable quality and specific properties. It is produced under a traditional or special technology and is assigned the contemporary or historical-geographical name of the specific area;
Place-of-origin denomination controllable quality wine made in a specific area – the wine meeting the requirements established to the place-of-origin denomination quality wines made in a specific area and its quality is secured under a special production control by the Vine and Wine Department – Samtrest (Georgian Winemakers' Trust);
Dry wine – a wine produced as a result of the complete alcoholic fermentation, in which the reducing sugar concentration does not exceed 4.0 g/dm3;
Semidry wine – a wine produced through the incomplete fermentation of the cap or grape must (natural semidry wine) or by adding the grape must or concentrated must (semisweet table wine), in which the reducing sugar concentration varies from 4 to 50 g/dm3;
Semisweet wine – a wine produced through the incomplete fermentation of the cap or grape must (natural semisweet wine) or by adding the grape must or concentrated must (semisweet table wine), in which the reducing sugar content varies between 5 to 50 g/dm3;
Sweet wine – a wine meeting the requirements established to semidry and semisweet wines and where the reducing sugar content varies between 30 to 50 g/dm3
Sparkling wine - a wine saturated with carbon dioxide produced as a result of the initial and secondary alcoholic fermentation of grape must in a closed vessel and where the excess pressure shall not be less than 3 bars at 200 C;
Effervescent wine – a wine artificially saturated by carbon dioxide where the excess pressure at 200 C must not be less than 2,5 bars;
Fortified wine – a wine produced by adding a rectified spirit to the boiling crush or boiling grape must and the actual alcoholic content of which varies between 15 to 22 percent;
Aromatized (flavored) wine – a wine produced by blending dry or special wines, spirit extracts of plants, beverage rectified spirit and sugar;
Brandy wine - the unprocessed and unfiltered young wine intended for brandy spirit production;
Brandy spirit – an intermediary product of brandy production obtained by a double or single distillation;
Wine brandy – a product possessing specific properties obtained by blending aged brandy spirits and further processing;
Aging – a long-term technological process of improving quality of brandy spirits, wine brandy and wine;
Actual alcoholic content by volume – the absolute alcoholic content by volume in 100 volume units of a product at 200 C;
Potential alcoholic content by volume – the absolute alcoholic content in 100 volume units of a product at 200C, if the product-available sugar has been completely fermented;
Total alcoholic content by volume – the aggregate of the actual and potential alcoholic content by volume;
Natural alcoholic content by volume – the total alcoholic content v/v before enrichment (before adding of grape must, concentrated must, sugar or beverage spirit);
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Sugar content – the reducing sugar mass concentration gr/dm 3; Titratable acidity – the aggregate of acids and acid salts available in the grape must and wine
which is titritable by alkaline solutions and calculated as per tartaric acid; Volatile acidity – the volatile acid content in wine calculated as per acetic acid; Uniformity (egalisage) – the blending of uniform wine materials according to a species,
quality and the place of origin to produce batches of the uniform composition; Blending (coupage) – a mix of wine materials (or brandy spirits) and various components
allowed in winemaking under this Law; Tirage – the technological operation of bottling and corking of a tirage blend in producing a
sparkling wine by the bottle-fermentation method; Wine alcohol – the ethyl spirit obtained from products of grape origin (wine, wine deposit,
marc); Alcoholic beverage – a product obtained from ethyl alcohol received from grape raw material
with addition of substances allowed in wine-making in accordance with this Law; Color – the product obtained by controlled high-temperature burning and heating of sucrose; Flavoring – the use of one or more flavors obtained from plant raw material allowed in wine-
making during wine and alcoholic drink production; Volatile substances – the volatile substances other than ethyl and methyl spirits contained in
alcoholic beverages; Grape products – the initial and secondary products of grape processing; Notification – a statement of the implementation of technological processes in connection
with commercial production and storage in the area of viticulture and winemaking produced by an entrepreneur under the procedure established by Ministry of Agriculture and Food of Georgia. (04.07.2002 N1635)
Chapter II.1 Georgian Vine-Growing and Winemaking Activity Regulating Body
Article 3.1
Activities in the area of vine-growing and winemaking are regulated by a person of public law – the Vine and Wine Department – Samtresti (hereinafter – Samtresti).
The Ministry of Agriculture and Food of Georgia shall exercise the state supervision of Samtresti. The structure, functions and powers of Samtresti are defined under its Charter to be approved by the Ministry of Agriculture and Food of Georgia. (04.07.2002 N1635)
Chapter III. Genetic Resources and Protection of Vine. Classification of Standard Vine Species or Varieties
Article 4
Genetic resources of the vine – the indigenous (local) varieties’ genetic resources and wild vine forms are the national wealth protected by the State.
The revealing, investigation, study and conservation of the genetic resources of the vine are funded by the state. Natural and legal persons may effect the same activity.
Article 5
The standard assortment of the vine comprises the indigenous and introduced (Vitis vinifera) species as well as the species phylloxera-resistant stock hybrids.
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This Law established the following standard assortment and classification of Georgian vine species and varieties:
A. White Grape Vintage Varieties
Avasirkhva Aligote Goruri Mtsvane Krakhuna Mtsvane Kakhuri Mtsvane Kakhuri – Clone 12 Rkatsiteli Rkatsiteli – Clone 48 Muskat Rkatsiteli Kisi Chardonnay Chinuri Tsitska Tsolikauri Tsulukidze Tetra Khikhvi Kapistoni Tetri Pinot Blanc
B. Red Grape Vintage Varieties
Aladasturi Alexandrouli Tavkveri Cabernet Sauvignon Mujuretuli Otskhanuri Sapere Ojaleshi Orbeluri Ojaleshi Pinot Noir Saperavi Saperavi Budeshurisebri Saperavi – Clone 359 Usakhelouri Shavkapito Chkhaveri Dzelshavi Kachichi
C. Deleted (04.07.2002 N1635)E. Table Wine Varieties
Kartuli Saadreo Khalili Chasla Blanc Red Budeshuri
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Ganjuri Kolkhuri Gorula Tbilisuri Karaburnu Sakhalkho Tetri Alexandriuli Muscat Tskhenis Dzudzu Muscat Rkatsiteli Tskhenis Dzudzu Abkhazuri
F. Phylloxera-resistant Stock Vine Varieties (Hybrids)
Berlandieri X V.Riparia Cober 5bb Berlandieri X V.Riparia 420 Chashla X V. Berlandieri 41B Berlandieri X V.Riparia Krechuneli 2 Berlandieri X SO – 4 Riparia X V. Rupestris 101 – 14 Riparia X V. Rupestris 3309 Riparia X V. Rupestris 3306 Rupestris Dulo (Monticola) Berlandieri X V. Riparia Tel. 8b Rkatsiteli X (V. Berlandieri X V.Riparia 420a) No. 32 Kharistvala Shavi X (V. Berlandieri X Riparia 420a) No. 19 Rkatsiteli X V.Riparia Gloire No. 14
Article 6
The cultivation of the varieties other than those included in the standard vine assortment as per Article 5 of this Law for the industrial production of grapes shall be prohibited.
The replenishment of the standard vine assortment with new selection and introduced varieties as well as the revealed clones is effected under the procedure established by the Ministry of Agriculture and Food of Georgia. (04.07.2002 N1635)
Article 7
This Law defines the following viticulture areas and sub-areas of Georgia for industrial use of grape varieties:
No, Area, Sub-area, Regional varieties: I. Eastern Georgia
Kakheti
a) Inner Kakheti – the Alazani River Basin:
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Rkatsiteli, Rkatsiteli – Clone No.48, Kisi, Mtsvane Kakhuri, Mtsvane Kakhuri Clone No.12, Khikhvi, Saperavi, Saperavi Budeshuriseburi, Saperavi Clone No.359, Cabernet Sauvignon, Tavkveri, Pinot Nior, Muscat Rkatsiteli.
Table Grape Varieties: Ganjuri, Tbilisuri, Khalili, Kartulis Saadreo, Alexandriuli Muscat
b) Outer Kakheti – Sagarejo Region, part of the Gardabani Region territory:
Rkatsiteli, Rkatsiteli – Clone No.48, Mtsvane Kakhuri, Mtsvane Kakhuri Clone No.12, Khikhvi, Saperavi, Saperavi Budeshuriseburi, Saperavi Clone No.359, Pinot Nior, Aligote, Chinuri
Table Grape Varieties: Ganjuri, Khalili, Kartuli Saadreo, Tbilisuri, Muscat Rkatsiteli Kartli
a) Lower Kartli:
Rkatsiteli, Rkatsiteli Clone No. 48, Aligote, Chinuri, Tavkveri, Asuretuli ShaviTable Grape Varieties: Ganjuri, Khalili, Karaburnu Saadreo, Tbilisuri, Kartuli,
Muscat Rkatsiteli. b) Inner Kartli
Chinuri, Goruli Mtasvane, Pinot Noir, Pino Blanc, Aligote, Rkatsiteli, Tavkveri, Shavkapito, Saperavi Budeshuriseburi
Table Grape Varieties: Ganjuri, Tbilisuri, Kartuli Saadreo, Gorula, Rkatsiteli Muscat, Tsiteli Budeshuriseburi, Karaburnu, Tskehis Dzudzu, Meskheti Akhaltsikhe – Aspindza – Adigeni, Goruli Mtsvane, Khikhvi, Aligote, Pinot Noir, Chardonnay
II. Western Georgia
Imereti
a) Upper Imereti – Sachkhere – Chiatura – Kharagouli Regions:
Tsitska, Tsolikauri, Goruli Mtsvane, Pinot Nior, Aligote, Chardonnay, Otskhanuri Sapere
b) Central Imereti – Zestaponi, Terjola, Baghdadi Regions:
Tsolikauri, Tsitska, Krakhuna, Otskhanuri Sapere, Goruli Mtsvane, Dzelshavi, Kapistoni Tetri, Aladasturi, Chardonnay
c) Lower Imereti – Tskhaltubo, Samtredia, Vani Regions:
Tsolikauri, Aladasturi
Racha Lechkhumi
a) Lower Racha
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Alexandriuli, Mujuretuli, Tsulukidze Tetra, Tsolokauri b) Lechkhumi
Usakhelouri, Mujuretuli, Tsolokauri, Orbeluri Ojaleshi The Black Sea Coastal Area
a) Guria
Chkhaveri, Aladasturi, Tsolikauri b) Ajara (Keda- Shuakhevi – Khulo)
Tsolikauri, Chkhaveri, Aligote, Pinot NiorTable Grape Varieties: Ganjuri, Chasla Blanc, Kartuli Saadreo
c) Samegrelo
Ojaleshi, Tsolikauri
d) Abkhazia
Tsolikauri, Chkhaveri, Kachichi, Avasirkhva, Tskhenis Dzudzu Abkhazuri
Chapter IV. Production of Grapevine Planting Material
Article 8
The selection and variety-pure plantations of grapevine rootstocks and scions are arranged in the farms of the state natural and legal persons. A plantation is laid out only on the basis of pure-variety and phytosanitary resistant grapevine plants included in the standard vine assortment.
For obtaining the bud-bearing material, a specially planted industrial vineyard may be allocated provided it complies with the requirements to the mother plantation and following the conduct of a mass and phytosanitary selection gives a guarantee for producing the variety pure, healthy, virus-free, certified planting stock.
A vineyard plot allocated for testing shall be separated from other plots, entered into the register and assigned the category of a mother plantation of scions.
Only tested (selected) rootstock and grafting material shall be allowed for grafting.
The right to produce grafted seedlings is assigned only to an entrepreneur who possesses:
own plantations of vine rootstocks and scions or grafting material received from the owner of such plantations;
planting and the appropriately equipped grafting and stratification and seedling storage facilities;
necessary equipment and facilities;
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the technical and phytosanitary control over the grapevine mother plantations, grafting material and grafted seedlings is exercised by Samtresti under the procedure established by the Ministry of Agriculture and Food of Georgia. (04.07.2002 N1635).
Article 9
The delivery (sale) of a nursery product shall be allowed only if appended with a certificate (04.07.2002 N1635) of conformance and the appropriate label.
The labeling, packing and transportation of a nursery product is carried out according to the state standard of its production and sale.
Imports and exports of sets are carried out in accordance with legislation of Georgia.
The certification of grapevine grafting and planting material is carried out under the procedure established by the Ministry of Agriculture and Food of Georgia.
The sale of grapevine grafting and planting material without a certificate of conformance will bring forth liability as provided by the Georgian laws. (04.07.2002 N1635)
Chapter V. Vineyard Cultivation and Tending Terms
Article 10
A vineyard shall be divided into a hobby, special and industrial vineyard. The basis for giving rise to a title to cultivate the industrial vineyard shall be a permit issued by Samtresti based on a notice (application) submitted by a legal natural or legal person. (04.07.2002 N1635)
Article 11
The observance of the assortment stipulated by this Law is binding in major vine-growing industrial regions, specific (04.07.2002 N1635) areas and sub-areas.
Article 12
The cultivation of an industrial vineyard in Georgia shall be allowed only by using a one-year or two-year phylloxera-resistant rootstock-grafted nursery product.
A true-rooted nursery plant (or that with the non-rooted stock) shall be employed only for cultivating the phylloxera-resistant mother plantations or for scientific purposes.
Article 13
The hectare yield of grapes for the production of vintage wines shall be regulated in the defined areas and sub-areas.
The hectare grape yield regulations and standards of the recommended grapevine loading in the regulated yield area shall be worked out only by the departmental research institute and approved by the Ministry of Agriculture and Food of Georgia.
The hectare yield of grapes shall not be limited in the areas producing table grapes, grape juice and wines of mass consumption.
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The observance of the regulations for applying nitrogenous, phosphate, potassium fertilizers in a productive vineyard shall be subject to control.
The cultural pest control and the observance of regulations for applying agricultural chemicals in a vineyard shall be carried out in accordance with legislation of Georgia.
The irrigation of a vineyard in the vintage wines producing area shall be stopped one month in advance of harvesting. (04.07.2002 N1635)
Chapter VI. Classification of Wines. Definition of Wine Production. Wine-making Practice
Article 14
The following classification of grape wines produced in Georgia has been established:
a) according to quality:
a.a) Table wines;a.b) Vintage wines;a.c) Province wines;a.d) Place of origin-named quality wines made in a specific area;a.e) Place of origin-named controllable quality wines made in a specific area.
b) according to types:
b.a) Dry wines;b.b) Naturally semidry and semisweet wines;b.c) Semidry and semisweet wines;b.d) Sparkling and carbonated wines;b.e) Special wines;b.f) Flavored wines
c) according to color:
c.a) White wines;c.b) Rose wines;c.c) Red wines.
The general production rules and regulations for wines as per paragraph one of this Article are established by this Law and the Ministry of Agriculture and Food of Georgia. (04.07.2002 N1635)
Article 15
1. The following processes are allowed in the wine making practice:
a) Aeration;b) Assemblage;c) Agitation (barbotage);d) Drawing;e) Filling-up;f) Cooling;
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g) Pressing;h) Distillation;i) Gelatinization;j) Ripening;k) Aging;l) Flavoring;m) Fortification;n) Disgorging (degorgeage);o) Testing (degustation);p) Demetallization;q) Desulfitation;r) Fermentation;s) Egalisage;t) Extraction;u) Blending;v) Neutralizing;w) Carbonation (saturation);x) Sulfication;y) Tirage;z) Centrifugation;aa) Filtration (04.07.2002 N1635)
2. The following materials and substances may be employed in winemaking practice: (04.07.2002 N1635):
a) Ammonium sulfate, ammonium bisulfate;b) New, dry and undiluted wine deposit;c) Bentonite;d) Nitrogenous anhydride;e) Diammonium phosphate;f) Diatomite;g) Fish glue;h) Egg albumin;i) Plant ash;j) Phytin;k) Yellow salt;l) Thiamin hydrochloride;m) Inert gases;n) Inert filters and agents;o) Ion containing resins;p) Casein and potassium caseinate;q) Potassium compounds (alganate, alginate, bicarbonate, bisulfite and metabisulfite, tartrate, bitartrate, neutral tartrate, pyrosulfite, sorbitol, ferroncyal, phytate);r) Kaolin;s) Flint dioxide;t) Acids (ascorbic, malic, citric, metatartaric, sorbic, tartaric);u) Polymeric fining agents;v) Askangel;w) Lactic-acid bacteria;x) Edible gelatin;y) Pure yeast culture;z) Tannin;
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aa) Enzyme preparations;ab) Tartaric acid and calcium carbonate homogeneous preparations;ac) Zeolite;ad) Animal albumin;ae) Activated carbon;af) Sand;
3. It is allowed:
For all categories of wine to deviate from the actual volume alcoholic content limit only within 0.5 volume percent of alcoholic content:
to employ a mistelle only for preparing a fortified wine (04.07.2002 N1635); to employ a piquette only for distilling or personal consumption of by the producer; to solve in the water materials and substances employed in the winemaking practice if so
required for their industrial use; to market the processed or unprocessed wine materials produced from the assortment listed in
the standard vine species classification provided they comply with the requirements stipulated by standards.
4. The wine, which does not contain the requisite alcoholic minimum defined for table wines may be employed for production of vinegar, alcohol distillation or personal consumption.
5. The following is not allowed in the winemaking practice:
The production of wine intended for marketing from the grapes harvested in the industrial vineyard cultivated in violation of the provisions and rules provided for by this Law;
The pressing of grapes, pulp and marc for industrial purposes in excess of the standards stipulated by normative and engineering documentation;
The fermentation of grape juice and the concentrated grape juice; The production of wine from the grape marc, less and raisin; The employment of a fortified product intended for distillation for other industrial purposes; The addition of water to the grape products listed in Article 3 of this Law, apart from the
alcoholic beverages: The addition of the rectified or other alcohol to the table, place of origin-named, sparkling and
carbonated wines, other than the brandy spirit being a component of the liqueur intended for sparkling and carbonated wines; (04.07.2002 N1635)
The addition of coloring and aromatic substances and essences to a wine (except for a flavored wine);
The addition of sucrose to a wine at any stage of winemaking with the purpose of fermentation or bringing its mass sugar content to the required condition, except for sugar syrup intended for sparkling and carbonated wines, as well as alcoholic beverages; (04.07.2002 N1635)
The employment of spirits other than the aged brandy spirits for brandy preparation; The production of a feigned wine by blends of sugar syrup (sucrose) solution, glycyrrhizin,
spirit, colored substances, acids, essences and/or other substances; The addition to wine products of the substances, which are not stipulated by paragraph 2,
Article 15 of this Law.
Chapter VII. Production and Registration of Vintage Wines in the Special Area (04.07.2002 N1635)
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Article 16
1. Deleted. (04.07.2002 N1635)
2. The production of the place of origin-named wines is based upon the following main criteria: (04.07.2002 N1635)
Grape production in the specific area; (04.07.2002 N1635) Grape variety; The agrotechnical regulations of grape production; The wine distillation procedure; The natural alcoholic content limit; The grape hectare yield and the wine output per hectare or per 1 ton of grapes; Physical-chemical and microbiological indicators, and the organoleptic valuation. The production of place of origin-named wines is allowed only from the varieties listed in the
grapes standard assortment. (04.07.2002 N1635)
Article 17
Each specific area shall be strictly defined by marking of a vineyard plot of the aggregate thereof and with regard for such factors (soil, climate, vineyard location, exposure, etc.) which precondition quality of the vintage wine produced in the area. (04.07.2002 N1635). The specific area and grape-growing province are defined by the Georgian Research Institute of Horticulture, Viniculture and Winemaking under the procedure established by the Ministry of Agriculture and Food of Georgia.
The existence of the vine varieties of the Vitis vinifera species not listed in the grapes standard assortment shall be possible in the special area within 5 years from its registration. (04.07.2002 N1635). If after 3 years the requirement as per item 2 of this Article is not complied with the special area of vintage wine production, the wines produced from the grapes harvested in this area shall not be given the “vintage wine” status.
If after 5 years after the specific area registration the requirement as per paragraph 4 of this Article is not observed in the vineyard intended for the production of place of origin-named wines, the wines made from the grapes of such vineyards shall not be assigned the place of origin-named wine status. (04.07.2002 N1635)
Article 18
Up to 15 percent of the grapes or wine produced in the same area from other standard vine variety from other specific area may be used when producing the place of origin-named quality wines made in a specific area.
Notwithstanding the requirements provided for in subparagraphs "a.c" and "a.d", Article 3 of this Law and upon production of the place of origin wines, the grape processing and winemaking are
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also allowable outside the specific area but within the same grape-growing area, and the wine bottling – outside the given grape-growing area but within Georgia under the procedure established by the Ministry of Food and Agriculture of Georgia. (04.07.2002 N1635) Article 19
The registration of place-of-origin quality wines produced in a specific area is carried out by the National Intellectual Property Center – Sakpatenti based on the Law of Georgia on Appellations and Geographical Indications.
The state control and supervision over production of the place-of-origin denomination wines is carried out under the procedure established by the Ministry of Agriculture and Food of Georgia. (04.07.2002 N1635)
Chapter VIII. Special Conditions of Marketing and Quality Rating of Place-of-Origin Denomination Wines
Article 20
By 1 January of the year following the vintage the Ministry of Agriculture and of Food of Georgia shall carry out inventory of the wines to be rated as place-of-origin denomination wines on the place of the their production, and shall asses their quality under the established procedure.
All natural and legal persons associated with the production and marketing of a place-of-origin denomination wine shall be obliged to ensure high quality of the certified wine during the entire period of the processes thereof.
Within the entire period of place-of-origin denomination wines production and marketing in Georgia the control over the production technology and the certified place-of-origin denomination wine quality shall be exercised in accordance with the legislation of Georgia.
In the event of the place-of-origin denomination wine quality deterioration it shall be subject to the transfer to a lower rate (re-certification) and is deprived of the right to be named a place-of-origin denomination wine made in a specific area. The procedure for transferring the wine quality to a lower category (re-certification) is established by the Ministry of Agriculture and Food of Georgia. (04.07.2002 N1635)
Article 21
The marketing of the following place-of-origin denomination wines shall not be allowed on the consumer market:
Dry and fortified wines – until December of the year following the vintage; Semidry and semisweet wines – until January of the year following the vintage; Sparkling wines:
Bottle-fermented – until expiry of 9 months at least after tirage;Tank-fermented – until expiry of 6 months at least after the start of fermentation;
Without a certificate; Without indication of the place-of-origin wine category, brand, name and the vintage year in
the accompanying documents Place-of-origin denomination wines – from the wood. (04.07.2002 N1635)
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Chapter IX. Sparkling Wines
Article 22
This Law defines the following classification by quality for sparkling wines produced on the territory of Georgia:
Sparkling wine; Place-of-origin denomination quality sparkling wine produced in specific areas; Place-of-origin denomination controllable quality sparkling wine made in specific areas.
(04.07.2002 N1635)
The Law establishes the following requirements to sparkling wines produced in Georgia determining their brand (type) in terms of their sugar content:
Extra-sec – sugar content does not exceed 3.0 g/dm3; Dry – sugar content is within 20 – 35 g/dm3; Demi-sec – sugar content is within 35 – 50 g/dm3; Medium-sweet – sugar content is within 50 – 80 g/dm3; Doux - sugar content exceeds 80 g/dm3.
The provisions established under Articles 17, 18 and 19 if this Law shall apply to the place-of-origin denomination sparkling wines. (04.07.2002 N1635)
Article 23
To produce the necessary sparkling wine brand, the dosage liqueur may be added only:
during the sparkling wine production by the bottle-fermentation method – upon completion of the disgorging operation
during the bulk process – upon completion of the secondary fermentation during placing of the sparkling wine into a tank or direct bottling
A sparkling wine may contain carbon dioxide produced only as a result of the secondary fermentation, except for the case when the sparkling wine is produced directly from the grape must.
Chapter X. Carbonated Wines
Article 24
The Law establishes the following requirements to the carbonated wine produced in Georgia determining its brand are in terms of its sugar content:
Dry – sugar content does not exceed 3.0 g/dm3; Demi-sec – sugar content is within 10 - 25 g/dm3; Medium-sweet – sugar content is within 30 - 80 g/dm3; Doux – sugar content exceeds 80 g/dm3.
Only the dosage liqueur is employed in the carbonated wine production to be added to a special mixture intended for carbonated wines or directly in bottles upon bottling of the carbonated wine.
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The dosage liqueur’s addition shall not be considered as a sugar content increase operation.
The dosage liqueur additions shall not cause an increase in the total sugar content by volume in the carbonated wine in excess of 0.5%.
Chapter XI. Alcoholic Beverages of Grape Origin
Article 25
The Law establishes the following classification of alcoholic beverages of grape origin produced on the territory of Georgia:
Wine brandy; Grape vodka; Hard drink; Liqueur and its infusion.
With the purpose of sweetening, coloring and flavoring alcoholic beverages the employment of sucrose, glucose, fructose, the concentrated grape sweet must, the grape must, color (burnt sugar), the natural oak extract, honey and other natural flavorings is allowed in the process of production thereof.
Article 26
The sugar content by volume of the brandy wine material shall not be (30.09.98 N1604) below 0.0%, while its titratable acidity – below 9.0 g/dm3.
The content of volatile acids in the brandy spirit shall not exceed 0.8 g/l, while the methyl alcohol content – 1.5 g/l (in terms of the water-free spirit).
Only the brandy wine material is allowable for distilling.
Article 27
The following wine brandy categories are established in terms of quality:
Ordinary brandy; Vintage brandy; (Deleted) (04.07.2002 N1635)
The ordinary wine brandy is produced in oak casks during three, four and five years from the aged brandy spirits. The three-year old brandy may be also distilled from the brandy spirit aged within three years on the active or non-active oak chips placed in the enamel tank. The vintage brandy is distilled from brandy spirits of six-year aging at least. (04.07.2002 N1635) According to the age of brandy spirit, the following groups of the vintage brandy are defined:
1st group – “Mature brandy” produced from 6-7-year old brandy spirits; 2nd group – “Top-quality mature brandy” – 8 to 10 years; 3rd group – “Old brandy”, produced from 10-20-year old brandy spirits; 4th group – “Very old brandy”, produced from brandy spirits aged during 20 years and above.
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In producing the 1st-group brandies, the five-year old brandy spirit may be employed for blends in the amount of not more than 10%. In producing the 3rd-group brandies, the seven-year old brandy spirit may be employed for blends in the amount of not more than 10%. In producing the 4th-group brandies, the eight-year old brandy spirit may be employed for blends in the amount of not more than 10%.
(Deleted) (04.07.2002 N1635)
Article 28
Only wine spirits may be used in production of grape vodka. The wine spirit may be rectified or filtered in a carbon filter or obtained by means of other equivalent processing to ensure the selection strengthening of certain organoleptic properties being characteristic of the spirit's grape raw material. (04.07.2002 N1635)
Article 29
The preparation of a wine-made hard drink is allowable only from the spirits obtained by wine distillation or secondary distillation: of the raw wine spirit.
The production of a hard drink from grape marc is permissible by using spirits obtained through distillation of the fermented marc. (04.07.2002 N1635)
Article 30
For producing liqueurs of grape origin, dairy products, fruits, wine including flavored wine and only wine spirit may be used in addition to the substances and products enumerated in paragraph 2, Article 25 of this Law. (04.07.2002 N1635)
Chapter XII. Production Labeling
Article 31
The label of a product bottled in the marketable container shall bear the following necessary inscriptions:
the name of product; the nominal volume; the actual alcoholic content; "Table wine" – in the case of a table wine; "Province wine" – in the case of a province wine; the place of origin and state registration number – in the case of place-of-origin denomination
and place-of-origin denomination controllable wines; "Georgian wine";
In the case of sparkling, carbonated, fortified and flavored wines the word "wine" shall be added with the words "sparkling", "carbonated", fortified" and "flavored", respectively; Producer's name;
Bottler's name when the producer and the bottler are different persons (04.07.2002 N1635)
A brandy label shall also indicate the average age of spirits employed in blending.
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A sparkling wine label shall be marked “Sparkled Wine”. Labeling of a sparkling wine shall be effected at the place of production. The employment of the “champagne”, “produced by the champagnization method” during any marking of a sparkling wine (on the label, case, in the documents, etc.) shall not be allowed.
During the product’s export, its label shall bear the inscription “Produced in Georgia”.
Article 32
The product’s body label, back label or neck label may indicate:
the product’s color; the grape variety or name provided the product (wine, brandy, etc.) is produced by
employment of at least 85 percent of the indicated grape variety or varieties; the vintage year in case at least 85 percent of the wine is produced from the indicated vintage
grape; the product's sugar content, gr/dm3; the traditional name of the product if it exists and is employed in its production area and the
synonym of the main raw material (grape) name provided it is traditional for the area; (04.07.2002 N1635)
the product's quality control registration number (for brand products) to be assigned to the product by the Ministry of Agriculture and Food of Georgia;
the volume of the bottled place-of-origin denomination product; (04.07.2002 N1635) the specifications concerning the production method, color, composition, ingredients, etc., and
which are regulated under the process manual for the given product; Information concerning:
producer and seller of the product;the natural and process conditions of production of the main raw material (grapes,
spirit, etc.) from which the product is made;(Deleted); (04.07.2002 N1635)the prizes awarded to the product;a group of producers or sellers (distributors) with which the producer of the given
product is associated if such information contributes to the product's prestige raising;
a historic place (monument) existing in the product's production area.
Decorative elements of the product intended for exports may contain additional or special information in accordance with laws of the importing country or at request of the importing person.
Article 33
The label indications of a wine and grape alcoholic beverage produced in Georgian shall be made in Georgian or in one or two foreign languages together with Georgian.
At the importer's request, two foreign languages may be used together with Georgian to indicate the product's name only. (04.07.2002 N1635)
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Article 33.1
The Ministry of Agriculture and Food of Georgia shall establish a labeling control procedure. (04.07.2002 N1635)
Chapter XII.1 Certification of Grape Products
Article 33.2
The Ministry of Agriculture and Food of Georgia shall ensure the organization of mandatory activities in the certification of grape products as homogenous goods under the statute-established procedure, while the Georgian Department of Standardization, Metrology and Certification shall be in charge of coordination of such activities.
Chapter XII.2 Export and Import
Article 33.3
Upon exports of grape products a certificate of origin shall be issued by Samtresti under the procedure established by the Ministry of agriculture and Food of Georgia. The exporting of place-of-origin denomination wines is permissible only in the bottled form.
Article 33.4
A grape product may only be imported if:
it does not contain harmful for the health substances; it does not require additional processing and is intended for direct consumption; its manufacturing procedure and composition comply with the requirements established by
Georgian laws
Each consignment of imported grape products shall be subject to certification, save the products imports from the countries whose certificates are recognized by Georgia based on international agreements. Chapter XII.3 Recording and Reporting
Article 33.5
The recording and reporting of technological processes related to the production and storage of commodities is binding on an entrepreneur engaged in the viticulture and winemaking sector.
The recording of technological processes encompasses the information concerning:
passport data of a vineyard, drape harvest data and average per hectare yield - in the grape-growing sector;
the quantity of grapes to be processed, the variety and place of production, as well as the name, quantity, physical-chemical properties and turnover of the processed production.
The reporting encompasses the information concerning:
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the grafting material and rootstocks production and sale; the vineyard's location, area and variety composition; production and turnover.
The procedure and form of recording and reporting of technological processes related to the production and storage of commodities in the viticulture and winemaking sector are established by the Ministry of Agriculture and Food of Georgia.
A violation of the recording and reporting rules in terms of technological processes related to the production and storage of commodities in the viticulture and winemaking sector involves responsibility under Georgian laws.
Chapter XII.4 Transitory Provisions
Article 33.6
The Ministry of Agriculture and Food of Georgia shall issue the following normative acts before 30 December 2002:
On the Procedure for Replenishing the Standard Assortment of Vine Species; On the Procedure for Technological and Phytosanitary Control over Grape Mother
Plantations, Grafting Material and Rootstock Production; On the Certification Procedure of Grape Grafting material and Rootstocks; A Statute on the Grape Wine Production General Rules and Regulations; On the Procedure for Establishing a specific Viticulture Area and Viticulture Province; On the Procedure for State Control over the Production of Place-of-Origin Denomination
Wines; On the Wine Quality Rating Procedure; On the Labeling Control Procedure; A Statute on the Alcoholic Beverages Certification System; A Statute on the Alcoholic Beverages Certification Procedure; On the Test laboratories Accreditation Procedure; On the Certificate of Origin Issuance Procedure; A Statute on the Technology Process Recording; A Statute on the Procedure of Mandatory Reporting on the Production and Marketing Activity
in the Viticulture and Winemaking Sector; On the Procedure for Delivery of Grapes from a Specific Area for Producing Place-of-Origin
Denomination Wines; Paragraph 2, Article 6, paragraph 5, Article 9, paragraph one, Article 333, and paragraph 5,
Article 335 of this Law shall come into effect from 1 January 2003.
Legal relations in connection with the place-of-origin denomination of Georgian wines Tsinandali, Teliani, Napareuli, Vazisubani, Mukuzani, Akhasheni, Gurjaani, Kardenakhi, Tibaani, Kindzmareuli, Manavi, Khvanchkara, Tvishi, Kvareli, Atenuri, Kotekhi, the corresponding specific area borders and the grape varieties planted in these specific areas shall be regulated before 1 January 2007 subject to a Presidential decree of 28 February 2002 No. 88 concerning the activities in connection with putting into effect the Law of Georgia "On the Place of Origin Denomination and Geographical Indications of Goods". (04.07.2002 N1635) Chapter XIII. Concluding Provision
Article 34
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This Law shall be put into effect upon its promulgation.
President of GeorgiaEduard ShevardnadzeTbilisi, 12 June 1998
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Appendix 3 to Annex 2
The international regime for the protection of GIs
There are a number of international instruments that provide for the protection of GIs. These include: the Paris Convention for Protection of Industrial Property, the Madrid Agreement for the Repression of False or Deceptive Indications of Source on Goods, the Lisbon Agreement on the Protection of Appellations of Origin and their Registration, and TRIPs.
A. The Paris Convention for the Protection of Industrial Property
According to its Article 2(1), the Paris Convention applies to the widest range of industrial property, including “indications of source and appellations of origin and the repression of unfair competition.” ‘Industrial property’ is defined at Article 1(3) to include “all manufactured or natural products, for example, wine, grain, tobacco leaf, fruit, cattle, minerals, mineral waters, beer, flowers, and flour.” Article 9 provides the remedies available in the event of infringement of marks and trade names. These remedies are seizure of all goods unlawfully bearing a trademark or trade or in the event that the law of a particular country does not allow seizure, then it shall be replaced by a prohibition of importation of the offending products. Article 10(1) provides that the remedies in Article 9 shall apply in “cases of direct or indirect use of a false indication of the source of the goods or the identity of the producer , manufacturer, or merchant.”
The Paris Convention approaches the issue of GI protection from the angle that it constitutes unfair competition. According to Article 10bis unfair competition arises when acts done by a competitor create confusion, when a competitor uses false allegations in the course of trade so as to discredit the establishment, the goods, or the industrial or commercial activities, of a competitor or when indications or allegations mislead the public as regards the “nature, the manufacturing process, the characteristics, the suitability for their purpose, or the quantity, of the goods.” The use of the word ‘characteristics’ in Article 10bis, as opposed to the earlier proposed which was ‘the origin’ means that only the importation of products containing “false” indications of geographic origin are prohibited. Geographic names that are merely misleading are not disallowed.
Consequently, in the overall sense, the Paris Convention only offers very limited GIs protection. In addition, despite its many signatories totalling 169 as at April 2005, the Paris Convention has had little impact in the protection of GIs because it has to be implemented in national law, something which many of its signatories did not do.
B. The Madrid Agreement for the Repression of False or Deceptive Indications of Sources on Goods
The agreement states its purpose in its title, that is, the “repression of false or deceptive indications of sources on goods.” Despite the prominence of the phrase ‘indications of source’ in the agreement, it is not defined. According to Article 1(i) of this agreement, “all goods bearing a false or deceptive indication by which one of the countries to which this Agreement applies, or a place situated therein, is directly or indirectly indicated as being the country or place of origin shall be seized on importation into any of the said countries.” In the event that seizure is not possible under national law, the agreement provides that import prohibitions should be applied.
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Article 4 of the Madrid Agreement is most instructive in its categorical statement that geographical indications of wines shall not be used as generic terms. It states: “The courts of each country shall decide what appellations, on account of their generic character, do not fall within the provisions of this Agreement, regional appellations concerning the source of products of the vine being, however, excluded from the reservation specified by this Article.” This agreement is therefore stronger than the Paris Agreement regarding the extent of protection it gives to geographical indications on wines.
As of April 2005, the agreement had 34 contracting parties. It has also not attained a high degree of popularity partly owing to the perception that its provisions on GIs protection are to exacting.
C. The Lisbon Agreement on the Protection of Appellations of Origin and Their Registration
This agreement offers the strongest protection of GIs. It was negotiated in keeping with Article 19 of the Paris Convention for the protection of Industrial Property. It applies the concept of “Appellations of Origin” as opposed to the concept of “geographical indications” used in the TRIPs Agreement, borrowed from French law which defines it as “the designation of a country, a region, or a locality that serves to indicate that a product originates from that place and owes its quality or characteristics to its geographical surroundings, including natural and human factors.” It should be noted that the definition includes not only “human factors” but also “natural factors.” The idea is therefore that only those products manufactured according to local traditions by local people qualify for protection under the protection of geographical appellations of origin.
Article 2 of the Lisbon Agreement “‘appellation of origin’ means the geographical name of a country, region, or locality, which serves to designate a product originating therein, the quality and characteristics of which are due exclusively or essentially to the geographical environment, including natural and human factors.” Like in the French Code de la Consommation, this definition includes both the human and natural factors. According to its Article 3, the agreement ensures the protection of appellation of origin against usurpation or imitation, even if the true origin of the product is indicated or if the appellation is used in translated from or accompanied by terms such as “kind”, “type”, “make”, “imitation” or the like.
The main objective is to guarantee the authenticity and origin of the raw materials and the traditional practices of the communities involved. As opposed to TMs law, appellations of origin guarantee consistency in manufacturing practices and the other natural (including climatic conditions and soil quality) and human practices that go into the production process of the protected item. Another difference with TMs is that an appellation of origin can never go into public domain and the name or designation cannot be used for “any similar product or for any other product or service as long as such a use is capable of altering or weakening the distinctiveness of the appellation of origin.”1
According to the Lisbon Agreement, an appellation of origin must first be protected under national law, and then notified to the World Intellectual Property Organization (WIPO). It is then WIPO’s duty to publish and notify this protection to all the other members of the Lisbon Agreement. All participating countries must oblige with their own protection of the appellation of origin upon notification unless they object within the period of one year. Article 6 is drastic in the extent of protection. It states that, “an appellation which has been granted protection in one of the countries ...cannot, in that country, be deemed to have become generic, as long as it is protected as an appellation of origin in the country of origin.”
1 French Code de la Consommation, Article L.115.
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The agreement provides a two-year phase-out period for appellations of origin which conflict with TMs in cases where the TM was registered prior to the appellation of origin in violation of the “first in time first in right” rule. According to Article 5, “If an appellation which has been granted protection in a given country pursuant to notification of its international registration has already been used by third parties in that country from a date prior to such notification, the competent Office of the said country shall have the right to grant to such third parties a period not exceeding two years to terminate such use, on condition that it advises the International Bureau accordingly during the three months following the expiration of the period of one year.”
In sum, the Lisbon Agreement gives the greatest protection to appellations of origin, and considers them superior to TMs. Relatively few countries, 23 in total, are parties to the agreement, including Georgia, France, Italy, Moldova, Bulgaria, Israel, Czech Republic and Slovakia.
D. The TRIPs Agreement
The TRIPs Agreement is the most comprehensive agreement on intellectual property rights (IPRs). Because of its wide membership, the scope of application is the widest of all the treaties described here. It covers all major IPRs, including trademarks and GIs. At Article 22.1, the TRIPs Agreement defines GIs as “indications which identify a good as originating in the territory of a Member, or a region or locality in that territory, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographical origin.”
A number of issues are evident from this definition. First, the availability of GI protection is limited to goods. It does not extend to services. Second, “good” can mean any good, including all kinds of agricultural products and foodstuffs, despite the fact that Article 23 is focused on wines and spirits. Third, the provision also mentions certain criteria that should be considered as being either quality, reputation or other characteristics alone. This means that any of the three are sufficient for eligibility, whereby quality would refer to some positive attributes, reputation would refer to favourable impression by users or consumers, and ‘other characteristics’ could include physical attributes such as color. And fourth, as a link between the product and its origin, the provision requires that the product should be “essentially attributable to its geographical origin.” This language would appear to have some flexibility to it, in the sense that “essentially attributable” is not only based on geographical connection (for example because of the quality of a product derives from the soils or climatic conditions of an area) but perhaps also by reputation.
Article 22(2) provides as follows:
In respect of geographical indications, Members shall provide the legal means for interested parties to prevent: (a) the use of any means in the designation or presentation of a good that indicates or suggests that the good in question originates in a geographical area other than the true place of origin in a manner which misleads the public as to the geographical origin of the good; (b) any use which constitutes an act of unfair competition within the meaning of Article 10bis of the Paris Convention (1967).”
This provision outlines the basic standard for GIs protection. It also has some in-built interpretive flexibility. For example “the legal means” can mean any number of methods of protection. Legislation, regulations, administrative mechanisms or even principles of common law such as unfair competition or passing off, are all included within the scope of conceivable ‘legal means’ of protection. The phrase “misleads the public” is comparable to the trademark law concept of “consumer confusion” and “likelihood of confusion” as found for example in Article 16 of the
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TRIPs Agreement. What “public” here means is open to various interpretations. It could mean for example the ‘wider public’ or the specific habitual consumers of a particular product. Further, the circumstances in which a consumer will be confused as to the geographical origin of product in practice are also not easy to establish legally. Article 22.2(b) refers to “any use which constitutes an act of unfair competition within the meaning of Article 10bis of the Paris Convention.” This provision in the Paris Convention refers to the doctrine of ‘unfair competition’, which may be read as importing into TRIPs the common law and civil law causes of action for GIs.
Article 23 provides for a higher level of protection for GIs of wines and spirits. Article 23.1 states as follows:
Each Member shall provide the legal means for interested parties to prevent use of a geographical indication identifying wines for wines not originating in the place indicated by the geographical indication in question or identifying spirits for spirits not originating in the place indicated by the geographical indication in question, even where the true origin of the goods is indicated or the geographical indication is used in translation or accompanied by expressions such as “kind”, “type”, “style”, “imitation” or the like.
“Legal means” in this provision also imports flexibility as to the mechanisms for protection. Protection is accorded even in circumstances when use of a GI might not mislead the public or even if it is accompanied by expressions such as “kind”, “type”, “style” or “imitation”. In sum, Article 23 increases protection for GIs of wines and spirits beyond what is contained in Article 22.3 which does not prohibit incorrect GIs if they are not misleading to the public.
Article 24 spells out the exceptions to the rules, that is, situations when a WTO Member may decide not to protect GIs. It allows persons who have used a GI in a continuous manner with regard to the same or related goods or services in the territory of that Member either (a) for at least 10 years preceding 15 April 1994 or (b) in good faith preceding that date. Further, in case a GI is synonymous with the customary name of a grape variety existing in the territory of that Member as of the date of entry into force of the WTO Agreement, that Member does not have to protect that GI. Hence, generic GIs are not protectable. A WTO Member can however waive this provision and grant protection to generic GIs anyway. In France for example, a GI can never be generic. According to Article 24.9, there is no obligation to protect geographical indications which are not or cease to be protected in their country of origin, or which have fallen into disuse in that country.
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Appendix 4 to Annex 2
Law of Georgia on Appellations of Origin and Geographical Indications of Goods
ARTICLE 1. SPHERE OF REGULATION
This Law regulates the relations formed in connection with registration, protection and use of goods (services) appellations of origin and geographical indications.
ARTICLE 2. MAIN DEFINITIONS USED IN THE LAW
1. Sakpatenti - National Intellectual Property Center of Georgia - a legal entity governed by the public law, which creates the legal grounds for acquisition of the rights of natural persons and legal entities in the sphere of intellectual property.
2. The State Register of the Appellations of Origin and Geographical Indication - the unity of the appellations of origin and geographical indications data, also the data of the persons entitled to the use of the registered appellations of origins and geographical indications.
3. Application - collection of the documents necessary for registration of the appellations of origin and geographical indications, or for acquiring of the right to the use of the registered appellations of origin or geographical indications.
4. Applicant - a natural person or legal entity or voluntary association of the producers, claiming for the registration of the appellation of origin or the geographical indication or for the right to the use of the registered appellation of origin or geographical indication.
5. Organoleptic characteristics - the characteristics of goods, the evaluation of which is carried out by means of human sense organs (smell, sight, taste, etc.).
ARTICLE 3. APPELLATION OF ORIGIN AND GEOGRAPHICAL INDICATION
1. Appellation of origin is the modern or historical name of a geographical place, region or, in exceptional cases, a name of a country (hereinafter referred to as "geographical area"), used for designation of the goods:
a) originating within the given geographical area;b) the specific quality and features of which are essentially or exclusively due to a particular geographical environment and human factors;c) production, processing and preparation of which take place within the defined geographical area.
2. Geographical indication is the name or any other indication designating a geographical place, district, region, in exceptional cases country (hereinafter - geographical area) and is used to describe the goods:
a) originating in that geographical area;b) the specific quality, reputation, or other characteristics attributable to that geographical area; c) production, or processing or preparation of which take place in the defined geographical area.
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3. If a traditional geographical or non-geographical names create a notion for public as to the origin of goods from the given geographical area, and the requirements of paragraph 1 Article 3 are fulfilled, then the said name can be regarded as appellation of origin of the goods.
4. Irrespective of the requirements of paragraph 1 Article 3 as an appellation of origin can be considered the name of a geographical area where, for the purposes of goods production, raw materials come from the area larger or different from said geographical area, if :
a) the different boundaries of the geographical area and conditions for raw material production are determined;b) there are inspection arrangements to ensure that those conditions are adhered to.
5. For the purposes of paragraph 4 of this Article, only live animals, meat and milk may be considered as raw materials.
ARTICLE 4. LEGAL PROTECTION OF APPELLATION OF ORIGIN AND GEOGRAPHICAL INDICATION
Protection of an appellation of origin and geographical indication is conducted by registration at Sakpatenti or on basis of the international agreement.
ARTICLE 5. THE ABSOLUTE GROUNDS FOR REFUSAL OF REGISTRATION
As an appellation of origin or a geographical indication shall not be registered the name or any other indication, which:
a) does not comply with the requirements of Article 3;b) has become a generic name, although it relates to the region where the goods were produced, processed, or prepared;c) where it conflicts with the name of a plant variety or an animal breed, that is likely to mislead the public as to the true origin of the goods;d) contradicts to the national dignity, religion and traditions, public morality and order;e) is likely to mislead the public as to the origin of the goods.
ARTICLE 6. PROTECTION OF HOMONYMOUS APPELLATIONS OF ORIGIN AND GEOGRAPHICAL INDICATIONS
If an appellation of origin or geographical indication registered in Georgia, or any name of the geographical are of Georgia is identical to an appellation of origin and geographical indication protected in the other country, then the rule of protection and conditions of use of said indication in Georgia is defined by the respective agreement.
ARTICLE 7. APPLICATION FOR REGISTRATION OF AN APPELLATION OF ORIGIN AND GEOGRAPHICAL INDICATION
1. An application for registration of an appellation of origin and geographical indication is filed with Sakpatenti by an applicant.
2. Protection of an appellation of origin and geographical indication of another country is conducted on basis of an international agreement.
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3. Registration of the appellation of origin and geographical indication in respect to the international agreement is conducted at Sakpatenti.
4. The application shall apply to one appellation of origin or geographical indication.
5. The application must be filed in Georgian language.
6. The application shall include:
a) a request for registration of an appellation of origin or geographical indication;b) the full name and legal address of the applicant; c) the appellation of origin or geographical indication;d) the list of the goods for which the registration of the appellation of origin or geographical indication is sought;e) the description of the goods and if necessary of the raw material, with the indication of their chemical, physical, microbiological and/or organoleptical and other characteristics.f) description of the geographical area location, by indicating its exact bounds;g) the document issued by the local administrative body confirming that the goods originate from the geographical area;h) the description of production specific conditions and methods characterizing the production technology of the goods and relevant geographical area, in case of existence of the mentioned.i) the documents confirming, that the specific quality, or properties of the goods are essentially or exclusively due to a particular geographical environment with its inherent natural and human factors, or specific quality, reputation or characteristics are attributable to this geographical area;j) documents and data stipulated by the subparagraphs e, f, g, h and i must be prepared and confirmed in accordance with the rule approved by legislation;k) the document confirming the payment of the prescribed fee;l) a power of attorney issued by an applicant in the name of his representative, if the application is filed by the representative;m) the application must be signed by the applicant or his representative.
ARTICLE 8. EXAMINATION, PUBLICATION, REGISTRATION
1. Sakpatenti checks whether the application complies the requirements of the Article 7 of this Law, whether there exist the bases defined by the subparagraphs b, c, d, e Article 5 of this Law and conducts the search in respect to the trademark, appellation of origin and geographical indication databases.
2. If the bases defined by the subparagraphs b, c, d, e Article 5 exist Sakpatenti takes the decision on refusal of the further examination of the application.
3. If the application complies the requirements defined by the Article 7 paragraph 6 subparagraphs e, f, g, h and i for additional consideration the application is send to the Ministry of relevant field.
4. If the application complies the requirements of the Article 7 of this Law and the basis defined by the Article 5 paragraphs b, c, d, e does not exist, Sakpatenti publishes the application materials in the Official Bulletin of the Industrial Property of Georgia (hereinafter the Bulletin), in one central and one local newspaper.
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5. If within three months after the publication of the application materials the additional information shall be presented to Sakpatenti, this information shall be send for consideration to the Ministry of relevant field.
6. If no information is presented within three months from the publication of the application materials, Sakpatenti takes the decision on registration, records the data of the appellation of origin or geographical indication in the State Register of the Appellations of Origin or Geographical Indications and publishes the data in the Bulletin.
7. In the Bulletin the following data shall be published:
a) an appellation of origin or geographical indication;b) the name of goods for which the appellation of origin or geographical indication was registered and description of its specific features;c) description of the geographical area, showing the exact borders thereof;d) full name and legal address of the applicant.
8. The registration of the appellation of origin or geographical indication is limitless.
ARTICLE 9. FEES
The fee defined in respect to the legislation of Georgia shall be paid for examination of an application for an appellation of origin or geographical indication, registration, publication, issuing of the extract from the Register, also for other legal actions regarding the protection of an appellation of origin and geographical indication.
ARTICLE 10. REGISTRATION OF AN APPELLATION OF ORIGIN AND GEOGRAPHICAL INDICATION ABROAD
Legal entities and natural persons of Georgia have the right to present the appellation of origin and geographical indication for registration in other country after their registration in Georgia.
ARTICLE 11. SCOPE OF PROTECTION
1. Proceeding from the registration of the appellation of origin or geographical indication is prohibited the following:
a) any direct or indirect commercial use of an appellation of origin or geographical indication registered in respect to the goods not covered by the registration, insofar as those goods are similar to the registered under that name or insofar as using the name exploits the reputation of the protected name;b) any use of the registered appellation of origin and geographical indication, which word for word designates the real place of goods manufacture, processing or preparing of the raw material, but is likely to mislead the public as to the true origin of the goods; orc) any use of such a name or indication, which is the imitation or evocation of registered appellation of origin or geographical indication, even in translation, or accompanied with such words as “type”, “style”, “similar”, "as produced in”, “method”, etc.d) any use of misleading indication as to the origin, essential qualities and features of the goods on the packaging, on an advertising material, or on documents relating to the goods.e) any packaging or presentation of a goods which can convey false impression as to its origin.
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2. Where a registered appellation of origin or geographical indication contain the generic name of the goods, the usage of that generic name shall not fall within the scope of Article 11.
3. The protected appellation of origin or geographical indication cannot be transformed into the generic name.
ARTICLE 12. THE USE OF THE REGISTERED APPELLATION OF ORIGIN AND GEOGRAPHICAL INDICATION
1. Any natural person or legal entity, which obtain or process the raw or have real undertaking in the boundaries of the registered appellation of origin or geographical indication and the special quality, features and reputation of the produced goods is completely conditioned or connected with this geographical place, can present the application to Sakpatenti forthe right to the use of the registered appellation of origin or geographical indication.
2. The data of the person entitled to the use of the registered appellation of origin or geographical indication Sakpatenti records in the Register.
3. The right to the use can be revised by the Ministry of relevant field on basis of inspection.
4. The use of the registered appellation of origin or geographical indication by the person, who is not registered as the holder of the right, is prohibited.
ARTICLE 13. INVALIDATION OF THE REGISTRATION OF AN APPELLATION OF ORIGIN OR GEOGRAPHICAL INDICATION
1. The registration of an appellation of origin or geographical indication can be invalidated if:
a) the registration has taken place under violation of the requirements of this Law;b) due to changing or disappearing of natural and/or humane factors, characteristic of the given geographical area, becomes impossible to produce such goods which would have the exclusive quality and properties indicated in the Register;
2. The protection of the appellation of origin or geographical indication of a foreign country shall be canceled in respect to the rule defined by inter-state agreement.
ARTICLE 14. RELATIONSHIP BETWEEN AN APPELLATION OF ORIGIN OR GEOGRAPHICAL INDICATION AND A TRADEMARK
1. If after filing with Sakpatenti of an application for registration of an appellation of origin or geographical indication, with Sakpatenti is filed an application for registration of a trademark, which is identical with or similar to the appellation of origin or geographical indication and in result of the registration of appellation of origin or geographical indication there exists one of the conditions defined by the Article 11 of this Law the pending of such an application for trademark is retained until taking of the decision on registration of the appellation of origin or geographical indication.
2. If at filing of the application for appellation of origin or geographical indication with Sakpatenti, the application for registration of a trademark, which is identical with or similar to the appellation of origin or geographical indication, has been already filed, the decision on registration of this trademark, has not been taken and in result of the registration of the appellation of origin or geographical indication there exists one of the conditions defined by the Article 11 of
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this law the pending of the application for trademark is retained until the decision on registration of the appellation of origin or geographical indication is taken.
3. If Sakpatenti takes the decision on refusal of the registration for appellation of origin or geographical indication, the consideration of the trademark application is retained in respect to the paragraph 1 and 2 of the Article shall continue at the request of the applicant by preserving of the filing date.
4. If by the use of trademark or its registration was caused the infringement defined by the Article 11 of this Law, then the appeal shall be drawn within 5 years from the day of the infringement of the rights of the appellation of origin or geographical indication or from the registration day of the trademark, if for this day the trademark has been already published and this date is earlier than the date of recognition of the rights infringement.
5. If one of the infringements defined by the Article 11 of this Law takes place by using of the trademark registered before the registration of the appellation of origin or geographical indication, the interested person can appeal claiming the prevention of the use of such trademark within 5 years term from the day of recognition of the infringement in respect to the appellation of origin or geographical indication. In the case of disagreement among the parties the use of the registered trademark may be continued temporarily, but no longer than the registration term.
6. If the trademark was registered in breech of the requirements of the paragraphs 1 and 2 of this Article, the registration of such a trademark is annulled on basis of the Court decision.
7. The registration of the trademark and its fair use is not terminated, if the registration was conducted before the beginning of protection of the appellation of origin or geographical indication in the country of origin or before this Law enters into force, whereas the coexistence of the trademark and appellation of origin or geographical indication must not lead the public into confusion, as to the origin of the goods.
8. The Article 11 of this Law is not applied for the trademark used for at least 10 continuous years before April 15, 1994 ( before the signing date of the World Trade Organization Agreement).
9. Taking into account the reputation of the registered trademark its notoriety and longevity of use, it is admissible not to register the appellation of origin or geographical indication, if such a registration leads the public into confusion as to the true origin of the goods.
ARTICLE 15. RESPONSIBILITIES FOR INFRINGEMENT OF THE RIGHTS ON APPELLATION OF ORIGIN OR GEOGRAPHICAL INDICATION
Infringement of the right arising from registration on an appellation of origin or geographical indication causes civil, administrative or criminal responsibilities in accordance with the current legislation.
ARTICLE 16. THE SUIT REQUIREMENTS
The holder of the right for the use of an appellation of origin or geographical indication, is authorized to bring an action against infringing party in the court and require the following:
a) prevention of the acts of infringement;b) compensation of damages:
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c) confiscation of illegally produced goods and the equipment used for production of said goods;d) destruction of all those labels, tags, drawings, imprints, packing, packing materials and advertisements including the registered name.
ARTICLE 17. TRANSITIONAL PROVISIONS
1. In three months after publication of this Law Sakpatenti shall elaborate and approve in respect to the established rule the “Instruction on Presentingof the Application for the Appellation of Origin and Geographical Indication and Procedures Relating to the Registration”.
2. Sakpatenti together with the Ministries concerned and other offices shall elaborate and for October 1, 1999 submit to the President of Georgia the Regulations on Defining of Geographical Area Boundaries Respecting the Goods Appellation of Origin and Geographical Indication, on Studying, Defining and Control of the Goods Characteristics Attributable to the Geographical Area.
3. Sakpatenti together with the Ministries concerned and other offices shall elaborate and submit to the President of Georgia for approval the list of appellation of origin and geographical indication goods produced in the Georgia to be provisioned in the international agreements.
ARTICLE 18. FINAL PROVISIONS
This Law shall enter into force from November 1, 1999.
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Appendix 5 to Annex 2
Statute of State Vine and Wine Department “SAMTREST”, a Legal Entity of Public Law
Approved by Order Number 2-30 dated 11.02.2003
of the Minister of Agriculture and Food of Georgia
Article 1. General Provisions
1. State Vine and Wine Department “Samtrest” (hereinafter referred to as “Samtrest”), a legal entity of Public Law, is established in accordance with the Law of Georgia on “Vine and Wine”, on the basis of state ownership. “Samtrest” is assigned to regulate all activities in the field of viticulture and wine.
2. “Samtrest” acts on the basis of the Constitution of Georgia, Laws of Georgia in force, regulations and other normative acts, international agreements and this Statute.
3. “Samtrest” has its own symbol, stamp with the state emblem of Georgia, letterhead, independent balance and bank accounts (including hard-currency accounts), and all other attributes of legal entity of Public Law.
4. “Samtrest”, as a subject of Public Law, is established as and becomes a legal entity after approval of its statute and appointing the legal representative.
5. The legal Address of “Samtrest” is 380023, Tbilisi, 41 Kostava St.
Article 2. Authority and Field of Action of “Samtrest”
1. “Samtrest” has its special authority for attaining the goals and fulfilling the functions imposed. It is eligible: to act in its own name; to enter into agreements; to be a Plaintiff and / or Defendant at the Court.
2. In line with the legislation in force, “Samtrest” is authorized to exert state supervision and control over the sector, providing fulfillment of the requirements of the legislation and the normative acts in force, as well as to take decisions concerning the penalties for administrative infringements.
3. The field of action of “Samtrest” mainly covers:
Regulation, supervision and control of the wine-growing sector of Georgia (hereinafter referred to as “the sector”);
Promotion of the sector development; upgrading the quality of wine-growing sector production; Export encouragement;
Protection of the interests of the state, producers and customers; defending the consumer market from low quality and fraud production; exclusion of the possibility of unfair competition and monopoly at each stage of production and supply.
Article 3. Functions of “Samtrest”
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1. The major functions of “Samtrest” are as follows:
(a) To elaborate proposals and recommendations for sector functioning and development; to participate in the preparatory works of the relevant programs, draft laws and regulations;
(b) To develop technical / technological documentation and projects of the sector and / or to participate in the preparatory work;
(c) To retrieve and analyze information concerning production and storage of commodities produced in the wine-growing sector pursuant to the legislation in force;
(d) To ensure technical and phyto-sanitary control over the production of vine mother plants, grafting materials and engrafted seedlings;
(e) To participate in the formation of the certification system for grapevine grafting and planting materials, products of grape vine origin;
(f) To carry out work related to accreditation of laboratories for examination of grape products and to submit this work to the Ministry;
(g) To issue licenses and permissions for production of grape vine seedlings, grapes, alcoholic products and ethyl spirits; to terminate, cancel and / or renew the licenses and permissions;
(h) To supervise and control production of Wines and Wine Brandy with Denominations of Origin;
(i) To monitor production of regional wines and wine brandy;(j) To take appropriate measures for downgrading the wine quality (moving to lower
category) within its competence;(k) To exert control over denominations of origin of registered wine and wine brandy
within its competence;(l) To carry out physical-chemical and microbiological analysis of alcoholic beverages
and ethyl spirit; to ascertain their compliance with the normative documents in force;(m)To control the labeling of commodities;(n) To issue the certificates of compliance for grape products within its competence;(o) To issue certificates for grape products designated for export; to record exported
products;(p) To review the data needed for registration of denominations of origin of wine and
wine brandy; to fix denominations of origin;(q) To increase the competitiveness of Georgian alcoholic products on the internal, as
well as external consumer markets; to promote entrance of alcoholic products on the markets and maximum usage of the sector’s export potential;
(r) To contribute to elimination of using false denominations of origin and geographical indications, as well as trade marks throughout Georgia and outside its borders;
(s) To support marketing / promotion activities related to the sector within its competence;
(t) To arrange and/or participate in the scientific – research, technical, technological and other programs;
(u) To ensure effective coverage of the sector’s state; to ensure information support to the sector;
(v) To liaise with the International Vine and Wine Organization (O.I.V.), as well as other International and National Organizations;
(w) To carry out technical, technological, informational and other activities related with the said field;
(x) To ensure proper functioning of the advisory board (under the Chairman’s office of “Samtrest”), as well as “Samtrest” and central wine tasting commissions;
(y) To provide lab services to “Samtrest” and central wine tasting commissions;
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(z) To deliberate the cases of administrative infringements and to impose the relevant administrative penalties within the authority determined with the law;
Article 4. “Samtrest” Activities and Structure
1. “Samtrest” is headed by a Chairman appointed and dismissed by the Minister of Agriculture and Food of Georgia;
2. The “Samtrest” Chairman has one deputy, the candidacy of which is agreed with the Minister of Agriculture and Food of Georgia and assigned by the Chairman.
3. The Chairman of “Samtrest”:
(a) implements overall management of “Samtrest” independently; carries personal responsibility for the fulfillment of “Samtrest” functions (determined by this Statute), as well as appropriate management of “Samtrest” activities;
(b) acts without proxy on behalf of “Samtrest” in relationships with state agencies, other organizations, legal and natural persons;
(c) makes decisions concerning the issues within the competence of “Samtrest”; issues orders and decrees; agrees on technological instructions for production of new products within its competence.
(d) determines full time positions, wage fund, provisions for loan and guarantee system in agreement with the Ministry of Agriculture and Food of Georgia (hereinafter referred to as “the ministry”); takes decisions not falling within its competence concerning “Samtrest” property; agrees the issues related loans and guarantees with the Ministry of Finance of Georgia;
(e) appoints / dismisses “Samtrest” employees; defines their functions and responsibilities;
(f) takes decisions within his competence regarding creation of commissions in “Samtrest”;
(g) disposes of “Samtrest” property in accordance with the Georgian legislation;
4. Should the Chairman of “Samtrest” be absent, his functions are delegated to the deputy chairman.
Article 5. “Samtrest” Structure
1. The structural sub-divisions of “Samtrest” are the following:
(a) Viticulture Sector Regulation Administration;(b) Wine Sector Regulation and Licensing Administration;(c) Certification Administration;(d) Marketing, External – Economic Relations and Informatics Administration;(e) Financial – economic, Legal and Organizational Support Administration;(f) “Samtrest” Laboratory.
Article 6. Advisory Board
1. A permanent Advisory Board (non-government body) consisting of 11 members is approved by the Minister of Agriculture and Food of Georgia;
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2. The Advisory Board is comprised of the representatives of scientists, entrepreneurs and the respective agencies;
3. The Chairman of the Advisory Board is elected from the Board members for period of three years;
4. The Advisory Board assembles as appropriate, though not less than 4 times per year;
5. The Advisory Board:
(a) discusses the situation in the sector; elaborates recommendations and proposals concerning the existing problems, development orientations / priorities and target programs;
(b) develops recommendations on the solution of problems related to “Samtrest” activities;
(c) elaborates proposals for the improvement and further development of normative acts;(d) makes recommendations concerning measures against adulteration.
6. Decisions of the Advisory Board are affirmed if the majority supports them.
Article 7. State Control
The Ministry of Agriculture and Food of Georgia oversees the activities of “Samtrest”.
Article 8. Property and Sources of Funding of “Samtrest”
1. “Samtrest” property is comprised of: capital assets and turnover means; intangible assets; tangible assets and financial resources.
2. Sources of funding of “Samtrest” are as follows:
(a) targeted funds allocated from the state budget of Georgia;(b) revenue generated from work carried out on contract;(c) revenue received from the fulfillment of state orders;(d) other revenues permitted by the Georgian legislation.
3. Pursuant to the rules defined within the legislation, to record and account for financial and economic activities; to draw up balance and to submit it to the Ministry;
4. In accordance with the legislation, the property and sources of funding of “Samtrest” are used to achieve objectives and fulfilling functions of “Samtrest”, to remunerate staff and to strengthen material and technical basis.
Article 9. Termination of the Activities and Liquidation of “Samtrest”
1. Termination of the activities and liquidation of “Samtrest” is carried out in line with the Georgian legislation in force;
2. Liquidation of “Samtrest” is carried out by a liquidator approved by the Minister of Agriculture and Food of Georgia;
3. After the liquidation of “Samtrest”, its property is transferred to the state ownership.
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Article 10. Transitional Provisions
Amendments and Addenda are made to this Statute on the basis of Order of the Minister of Agriculture and Food of Georgia.
Article 11. Concluding Statements
Sub-clause “g” of Clause 1 of Article 3 of this Statute shall come into effect after the enactment of the Law of Georgia on “Basics of Licensing and Authorization of Entrepreneurial Activities”.
Translated by: Nutsa Amirejibi,25.03.2003
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