Tequila Regulatory Council (CRT)Tequila Regulatory Council (CRT)Tequila Regulatory Council (CRT)Tequila Regulatory Council (CRT)

THE APPELLATION OF ORIGIN THE APPELLATION OF ORIGIN THE APPELLATION OF ORIGIN THE APPELLATION OF ORIGIN TEQUILA TEQUILA TEQUILA TEQUILA

Intellectual Property Rights (IPR) Protection of the Appellation of Origin Tequila

Washington D.C. June 3, 2010

Agenda:

1. Appellations of Origin from Mexico

2. Appellation of Origin Tequila

3. Tequila Regulatory Council

4. Infringements against Tequila Intellectual Property Rights (IPRs)

5. International Protection to the IPRs of Tequila

6. Protection of Tequila in the USA1. Institutional: Success cases and cooperation status

2. Certification Mark Register: status of register

7. Challenges of the Tequila protection in the US

1. TEQUILA (1974)

2. MEZCAL (1994)

3. OLINALÁ (1994)

4. TALAVERA (1997)

5. CAFÉ DE VERACRUZ (2000)

6. BACANORA (2000)

7. ÁMBAR DE CHIAPAS (2000)

8. SOTOL (2002)

9. MANGO ADS CHIAPAS (2003)

10. CAFÉ DE CHIAPAS (2003)

11. CHARANDA (2003)

12. EL CHILE HABANERO (2008)

13. VAINILLA DE PAPANTLA (2009)

Appellations of origin from Mexico

3

Regional alcoholic beverage

Obtained from:

Agave tequilana Weber blue variety

Production started in 1700´s (Jalisco)

Production and marketing are subject to regulation (NOM)

The first NOM was created in 1949

In 1974 Mexico established the Appellation of Origin of Tequila

The NOM is verified and certified by the CRT since 1994

Tequila

5

The manufacturing process of Tequila

1. Harvest or jima 2. Cooking or hydrolysis 3.Extraction

7. Aging6. Distillation5. Fermentation

4.Formulation

8. Bottling

Tamaulipas Tamaulipas (11 municipalities)(11 municipalities)

Guanajuato Guanajuato (7 (7 municipalitiesmunicipalities))

MichoacMichoacáán n (30 municipalities)(30 municipalities)

Jalisco Jalisco

(125 municipalities)(125 municipalities)

Nayarit Nayarit (8 municipalities)(8 municipalities)

Territory of the Appellation of Origin Tequila

7

The official standard for Tequila establishes:CATEGORIES AND CLASSES OF TEQUILA

CATEGORIES CLASSES1. Silver

2. Young or Gold

3. Aged (2 months aging)

4. Extra Aged (1 year in barrels minimum)

5. Ultra Aged (3 years in barrels minimum)

TEQUILA 100% AGAVETEQUILA 100% AGAVETEQUILA 100% AGAVETEQUILA 100% AGAVE

Produced from only the fermented and distilled juices of the Agave tequilanaWeber blue variety

Bottled exclusively at the AOT

TEQUILA TEQUILA TEQUILA TEQUILA

Made with at least 51% of Agave tequilanaWeber blue variety sugars and 49% of sugars from other sources

It can be bottled abroad

1. Silver

2. Young or Gold

3. Aged (2 months aging)

4. Extra Aged (1 year in barrels minimum)

5. Ultra Aged (3 years in barrels minimum)

Clearly established rules:Clearly established rules:

Appellation of Appellation of Appellation of Appellation of Origin Origin Origin Origin TequilaTequilaTequilaTequila

Appellation of Appellation of Appellation of Appellation of Origin Origin Origin Origin TequilaTequilaTequilaTequila

Elements of the Appellation of Origin of Tequila

Delimited geographical region

Conformity assessment agency:

Supply chain data - 2009

Farmers 18,000

Agave hectares 90,000

Municipalities with Agave 171 out of 181 protected by AOT

Source of income for households 60,000

Tequila producers (Distilleries) 150

Certified Brands 1,200

Exports (more than 100 countries) 136 million Liters

Total production 249 million Liters

Agave consumption 924,000 tons

Excise Tax Revenue (IEPS) $ 210 million USD

10

150 Distilleries

ExportsExportsExportsExportsTequila & Tequila 100% agaveTequila & Tequila 100% agaveTequila & Tequila 100% agaveTequila & Tequila 100% agave40% Alc. Vol. Million of liters

Certification Organization

Verification Unit

Certified Laboratory

Accredited by the EMA and approved by the DGN

National and international scope

Non-profit organization

Offices in Mexico and abroad including US, Spain, Switzerland, and China

Impartial and legally independent

Based on the European models, such as Champagne, Cognac and Sherry

Tequila Regulatory Council (CRT)

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¨A¨ Tequila producers

¨B¨ Agave growers

¨C¨ Bottlers and marketers

¨D¨ Mexican Government: • Ministry of economy: DGN, IMPI• Ministry of Health • Ministry of Agriculture and Rural Development• Bureau of Consumer Protection

CRT members

CRT objetives

Verify and certifythe fulfillment of the

Official Mexican Standard forTequila.

Safeguard the Appellation of Origin Tequila

in Mexico and around the World

Guarantee the authenticity of the Tequila that the consumer acquires

Issue timely and truthful information useful for the Agave- Tequila

productive chain.

1. Physical inspection to 100%

of the process.

2. Documentary inspections

3. Laboratory tests

Verification of the Authenticity of Tequila in Mexico by CRT

Through a permaent on site inspection, process control and source of the agave.

Accountant records, labeling and commercial information, quality control systems and production methods.

Sampling, measuring and checks and balances of materials.

Most common infringements to the Appellation of Origin of Tequila

Counterfeiting

Unfair competition

Fraud

Passing off

Dissolution

Destruction of false productsreported abroad

Holland: certified trademark with fake product

New Zealand

Lithuania

International Protection

26 Member countries to the Lisbon AgreementLisbon AgreementLisbon AgreementLisbon Agreement for the Protection of Appellations of Origin- Tequila registered at WIPO since 1978

Members of the WORLD TRADE ORGANIZATION (WTO) that have signed the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS)(TRIPS)(TRIPS)(TRIPS)

The countries that have signed Bilateral or MultilateralBilateral or MultilateralBilateral or MultilateralBilateral or Multilateral Trade Agreements with Mexico

International legal framework

•• MMééxicoxico--UniUnióón European Europea

•• MMééxicoxico--EFTAEFTA

•• MMééxicoxico--JapJapóónn

•• MMééxicoxico--ColombiaColombia

•• MMééxicoxico--BoliviaBolivia

•• MMééxicoxico--Costa RicaCosta Rica

•• MMééxico xico -- El Salvador El Salvador

Guatemala y HondurasGuatemala y Honduras

•• NAFTANAFTA

•• MMééxico xico -- NicaraguaNicaragua

•• MMééxico xico -- ChileChile

•• MMééxico xico –– IsraelIsrael

MX-NICMX-BOL

G-3

TLCAN

MX-EUMX-CR

MX-JAPON

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Measures to protect Tequila taken Measures to protect Tequila taken Measures to protect Tequila taken Measures to protect Tequila taken by CRT internationallyby CRT internationallyby CRT internationallyby CRT internationally

• Preventative measures:

Registers of Tequila

Protection to the word Tequila

International Watchers

Cooperation with customs

• Actions against infringements to Tequila IPR’s:The CRT works as a strong defender of the AOT together with the Mexican Government

CRT has set up claims in Courtclaims in Courtclaims in Courtclaims in Court in the European Union against cases that do not respect the GI Tequila

Registros de DO y marcarios gestionados por el CRT

adicionales a los Acuerdos de Reconocimiento DOT

# PAIS OTORGADO EN TRAMITE PROYECTO TITULAR FIGURA

PUBLICADA 2010 - 2011

P/oposición

1 EUA CRT MARCA DE CERTIFICACION

2 Canadá DGN MARCA DE CERTIFICACION

3 Guatemala CRT REGISTRO DOT

4 Honduras CRT REGISTRO DOT

5 El Salvador CRT REGISTRO DOT

6 Costa Rica CRT REGISTRO DOT

7 Nicaragua CRT REGISTRO DOT

8 Panamá CRT REGISTRO DOT

9 Ecuador CRT REGISTRO DOT

10 Colombia CRT REGISTRO DOT

11 Brasil CRT REGISTRO DOT

12 Uruguay CRT REGISTRO DOT

13 Chile CRT REGISTRO DOT

14 Argentina CRT REGISTRO DOT

15 Unión Europea CRT MARCA COLECTIVA

16 Ucrania CRT REGISTRO DOT

17 Rusia CRT REGISTRO DOT

# PAIS OTORGADO EN TRAMITE PROYECTO TITULAR FIGURA

PUBLICAD

A 2010-2011

18 Sudáfrica CRT MARCA DE CERTIFICACION

19 Turquia CRT REGISTRO DOT

20 India CRT REGISTRO DOT

21 Dubai CRT REGISTRO DOT

22 China CRT MARCA CERTIFICACION

23 Taiwan CRT MARCA CERTIFICACION

24 Hong Komg CRT MARCA CERTIFICACION

25 Tailandia CRT REGISTRO DOT

26 Australia CRT REGISTRO DOT

27 Nueva Zelanda CRT REGISTRO DOT

TOTALES 8 3 6 15 pa15 pa15 pa15 paííííses ses ses ses 20 Registros

7 Marcas de certificación o colectivas

Registrations abroad

Collective trademark at the European Union

Registrations abroad

Trademark registered in China

Registrations abroad

Trademark registered in Uruguay

CRT in theUnited States of America

CRT uses two primary mechanisms to protect Tequila in the US:

• Institutional

• Certification mark

Promotion focused on education

Liaison with Government

Liaison with industry and organizations

Protecting the Protecting the AO TequilaAO Tequila

Monitoring markets/

Reporting for prosecution by authorities

Status of the protection of Tequila in the USa) Institutional

CRT works together with Mexican and American authorities, reporting any infringement against Tequila:

• CRT has worked with TTB to ensure the protection of the consumer and therefore the protection of Tequila in the US.

• From 2006, all authorized Tequila bottlers in the US have to report every brand of Tequila they bottle, and this has helped to the traceability of Tequila in the US.

Product reported by CRT to TTB:Product reported by CRT to TTB:Product reported by CRT to TTB:Product reported by CRT to TTB:sample, webpage, receipt, pictures; this “Tequila” was claimed to be produced

in Nantucket, MA

TTB stopped its sales and advertisements

Market monitoring and actions taken through institutional channels

Status of the protection of Tequila in the USa) Institutional channel

Participation of CRT in meetings of US and Mexico Authorities - as technical support .

• In this framework CRT provides a report of the infringements found in the US and in third countries related with the US (for being the origin of the products found).

• Cooperation amongst TTB and CRT Laboratories: Laboratories: Laboratories: Laboratories: exchange of information and mutual visits

• CRT has suggested some additional measures measures measures measures to ensure the traceability of the Tequila bottled in the US

Status of the protection of Tequila in the USa) Institutional channel

Status of the protection of Tequila in the USb) Certification Mark Register

CRT applied for the Certification Mark TEQUILA since 2003 at USPTO

The certification mark Tequila attests:

(1) that the distilled spirits are made from a specific variety of the blue agave plant grown in certain regions of Mexico, as defined by Mexican law; and

(2) that the distilled spirits are produced according to the manufacturing standards set by Mexican law regarding fermentation, distillation, and aging;

(3) that the finished distilled spirit product meets the requirements set by Mexican law regarding the percentage of blue agave sugars, bottling, labeling and quality control procedures

• Steps completed in the process:Steps completed in the process:Steps completed in the process:Steps completed in the process:

– Understanding of the Tequila standards and the role of the CRT as a certification entity

– Proof of the legitimate controllegitimate controllegitimate controllegitimate control of Tequila by the CRT.– Clarification of the manufacturing process and the need to certify that the

product is in compliance with the standards.– Conditions under which the “letter of certification” is to be granted.– The certification was verified on almost 100 trademarks per the USPTO

request

• Published as of December 30th, 2008.Published as of December 30th, 2008.Published as of December 30th, 2008.Published as of December 30th, 2008.

• At that time there were 4 possible oppositionsAt that time there were 4 possible oppositionsAt that time there were 4 possible oppositionsAt that time there were 4 possible oppositions

Status of the protection of Tequila in the USb) Certification Mark

Challenges for the protection of Challenges for the protection of Challenges for the protection of Challenges for the protection of Tequila in the USATequila in the USATequila in the USATequila in the USA

A) Challenges for the Institutional Channel: A) Challenges for the Institutional Channel: A) Challenges for the Institutional Channel: A) Challenges for the Institutional Channel:

• Encourage authorities to execute exemplary actions against infringers

• Improve the traceability of the Tequila bottled in the US

• Ensuring the authenticity of Tequila through TTB lab testing

B) Challenges for the Certification Mark protection:B) Challenges for the Certification Mark protection:B) Challenges for the Certification Mark protection:B) Challenges for the Certification Mark protection:

• Reconcile the remaining opposition to the Certification Mark

registration

Thank you very much!Thank you very much!Thank you very much!Thank you very much!

Contact details:

www.crt.org.mx

daniela.solis@crt.org.mx

CRT Representative for the US and Canada