Role of Geographical Indications in Economic Development

Shantanu Arvind Houzwala[i]


A geographical indication (GI) is a name or sign used on products which relates to a specific geographical location or origin[ii] (e.g., a town, region, or country). The use of a geographical indication, as an indication of the product's source, acts as a certification that the product possesses certain qualities, is made according to traditional methods or enjoys a good reputation due to its geographical origin. The basic concept underlying GIs is simple, and familiar to any shopper who chooses “Darjeeling” tea over “black” tea[iii]. “Mysore Sandal Soap,” “Hyderabad Haleem,” “Puneri Pagadi,” “Mahabaleshwar Strawberry,” “Warli Painting,” “Nagpur Orange” are some well-known examples[iv] of names associated throughout India with products of a certain nature and quality, known for their geographical origin and for having characteristics linked to that origin.

Since the adoption of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) in 1994, which contains a section[v] on geographical indications. This form of intellectual property has attracted collective attention from the legislators and trade negotiators, as well as producers, lawyers, and economists across the world. It is due to the TRIPS agreement, that GI is now catching the eye of many countries, as opposed to a small number previously.

Success stories from the world of GIs prove that GIs, if well managed, are intangible assets with interesting potential for product distinction, the creation of added value, as well as spin-off effects in areas related to the principal product for which the GI is known.

Why Develop a GI?

Interest in GIs has thrived in recent years. The obligation, under the TRIPS Agreement, for Members of the World Trade Organization (WTO) to protect GIs has, to a large extent, triggered this attention. But beyond that, what creates the attraction? The short answer is that they are seen as useful tools in marketing strategies and public policies, for which there has been growing interest in the last two to three decades.

Consumers pay attention to the geographical origin of products and care about specific individualities present in the products they buy. In some cases, the "place of origin" suggests to consumers that the product will have a particular quality that they may value. Often, consumers are prepared to pay more for such products. This has favoured the development of specific markets for products with certain features related to their place of origin. Geographical indications can thus be a key component in developing brands.

Geographical indications as a factor of rural development:

Many studies[vi] indicate that, under proper conditions, GIs can add to development in rural areas. The right to use a GI generally lies with regional producers, and the added value generated by the GI therefore accrues to all such producers.

Geographical indications express information about the origin-bound characteristics of a product. They therefore function as product differentiators on the market by enabling consumers to distinguish between products with geographical origin-based characteristics and others without those characteristics. Geographical indications can thus be a key element in evolving brands for quality-bound-to-origin products. Because GI products tend to create a premium brand price, they contribute to local employment creation, which eventually may help to prevent rural exodus. Also, GI products often have important spin-off effects, for example in the areas of tourism and gastronomy. The recognition and protection on the markets of the names of these products allows the community of producers to invest in maintaining the specific qualities of the product on which the reputation is built. Most importantly, as the reputation spreads beyond borders and demand grows, investment may be directed to the sustainability of the environment where these products originate and are produced. GIs may bring significance to a region not only in terms of jobs and higher income but also by upholding the region as a whole. In this regard, GIs may contribute to the establishment of a “regional brand”[vii].

For example, in India, cheap powerloom-made sarees are sold as highly-reputed “Banarsi” handloom sarees within and outside the Varanasi region. Another example could be of Muga Silk from Assam[viii] which is known for its extreme durability and has a natural yellowish-golden tint with a shimmering, glossy texture which is being exported to US and European markets.

Why protect a geographical indication[ix]?

  • GI’s are more than just a name or a mark. They reflect a character strongly linked to geographical areas of varying sizes, thus giving them an emotional and an ethical component. A GI’s reputation is a public, intangible asset. If not protected, it could be used without restriction thus resulting in the diminishing of its value. An GI protection confers the right to use the indication by preventing its use by a third party whose product does not conform to the applicable standards. This ensures the quality of the product and hence prevents it from diminishing its value.

  • The use of GIs by unauthorised producers could damage the interest of legitimate producers and the consumers. The Interest of the legitimate producers may get adversely affected due to the compromised quality and characteristics of products marketed by the unauthorised producers.

  • A non-registered GI may be registered as a trademark by an individual producer or company, for goods identical or similar to those identified by the GI. This adverse act of granting a trademark could occur at the stage of international borders for such indications which are protected in one jurisdiction but not in others. For jurisdictions in which the GI is not registered, the indication may be considered a unique sign available for registration as a trademark. The first to file for registration would obtain the trademark, which might give them the right to exclude the use of the indication by anyone else, including the producers who had historically used it in their country of origin. Thus, the conflict between earlier trademark registration and GIs is a subject of international debate that is yet to be resolved[x].

  • Where a GI is no longer associated with a product linked to a geographical origin but is used instead on a regular basis in terms of common terminology amongst the consumers to designate the product, it is said to have become a generic indication in nature. In such a case, the indication can be used by anyone to designate a type of product rather than a product with a distinct geographical origin and specific geographical qualities or characteristics. It can no longer function as a unique sign or be used in a product differentiation strategy. Protecting a GI and enforcing the right obtained over it contributes to reducing the risk of that indication becoming a generic term.

Legal Effect

Geographical Indications protection is granted through the TRIPS Agreement (1994). GI protection restricts the unauthorised use of GIs in order to recognize a particular type of product unless the product and/or its constituent materials and/or its production method originate from a particular area and/or meets a certain agreed standards. Sometimes, these laws also specify that the product must meet definite quality tests that are directed by an association that owns the exclusive right to license or allow the use of the indication.[xi] GIs are recognized through either public or private law: depending on the GI protection system applied among the different WTO state members, either through common law or through sui generis law[xii].

GI protection granted are territorial in nature, thus are governed through various domestic laws which could differ from State to State. In certain jurisdictions, GIs may be protected through a system that applies specifically and exclusively to them – a sui generis system of protection. Such systems establish a specific right, a sui generis right, over GIs, separate from a trademark right or any other IP right. A sui generis protection system exists in the EU[xiii] with regard to GIs for wines and spirits, agricultural products and foodstuffs. Many other jurisdictions throughout the world, such as India, Switzerland, and the African Intellectual Property Organization, among others, also have sui generis systems of protection.

Ø TRIPS Agreement

TRIPS Agreement contains a general obligation[xiv] for WTO Members to provide protection against unauthorised use of a GI and such other trade practices which may be constituted as unfair under the Competition laws.

Article 22 of the TRIPS Agreement says that all governments must provide legal opportunities in their own laws for the owner of a GI registered in that country, to prevent the use of marks that mislead the public as to the geographical origin of the good. It also says that governments may refuse to register a trademark or may invalidate an existing trademark if it misleads the public as to the true origin of a good.

Article 23 of the TRIPS Agreement says that all governments must provide the owners of GI the right, under their laws, to prevent the use of a geographical indication identifying wines or spirits not originating in the place indicated by the geographical indication. This applies even where the public is not being misled, where there is no unfair competition and where the true origin of the good is indicated or the geographical indication is accompanied by expressions such as "kind", "type", "style", "imitation" or the like.

Ø Legislation in India

India, as a member of the WTO, enacted The Geographical Indications of Goods (Registration & Protection) Act, 1999 (GI Act) has come into force with effect from 15th September 2003[xv]. An application for the registration of a GI is to be made to the Registrar of Geographical Indications in the form prescribed under the GI Act read with the Geographical Indications (Registration and Protection) Rules, 2002. A GI is registered for a period of 10 years and the registration may be renewed from time to time for a period of 10 years at a time.

A registered GI is protected against infringement. An interesting feature of the GI Act is the distinction that it makes between the two concepts: ‘‘registered proprietor’’ and ‘‘authorized user’’. The ‘‘Registered proprietor’’ in relation to a GI means any association of persons or of producers or any organization for the time being entered in the register as proprietor of the GI[xvi]. ‘‘Authorized user’’ means the authorized user of a GI registered under the GI Act[xvii].

Another important feature is that while article 23 of TRIPS restricts the additional protection only to wines and spirits, under the GI Act, the central government of India has been given the discretion to accord similar protection to other categories of goods also, by way of notifying such goods in the Official Gazette.[xviii]

The remedies relating to the infringement of Geographical Indications are similar to the remedies relating to the infringement of Trademark. Thus, under the GI Act, falsification of a GIs will carry a penalty with imprisonment