On 19 February 2019, Italian company Nero Lifestyle Srl (“Nero”) filed a trade mark application with the European Union Intellectual Property Office (“EUIPO”). The application sought protection for the word mark NERO CHAMPAGNE, to be registered across the EU, in respect of various goods and services including:

• “wine complying with the specifications of the protected designation of origin ‘Champagne’” in class 33
• services for the “retailing and wholesaling…of wine bearing the protected designation of origin ‘Champagne’” in class 35
• a plethora of cultural and promotional services such as publications, events, wine tastings, and party planning in class 41 – all “intended to present and promote wine bearing the protected designation of origin ‘Champagne’”

As Nero was clearly aware from how it chose to describe its goods and services, “Champagne” has been registered as a protected designation of origin (“PDO”) in the EU since 1973. Due to its registered protection it is unlawful to use the PDO “Champagne” unless the product concerned complies with the product specification for Champagne and comes from the geographical region of Champagne in France. PDOs are therefore a type of geographical indication (“GI”).

Seal of origin:

The reason that GIs are protected is to assure consumers that agricultural products bearing the GI have certain specific characteristics, and accordingly, offer a guarantee of quality due to their geographical provenance. Protecting this guarantee requires preventing the improper use of GIs by third parties seeking to exploit the GI’s reputation, by using that prestigious name for products which do not comply with the specifications, and which accordingly do not carry the same guarantee of quality.

This stands to reason – think how upset you might be if you purchased cold meat labelled “Prosciutto di Parma” only to find out it was sliced polony!

France has various established bodies which act as guardians of their GIs such as “Champagne” and “Cognac”. In the case (pun intended) of “Champagne”, Le Comité interprofessionnel du vin de Champagne (“CIVC”) and the Institut national de l’origine et de la qualité (“INAO”) serve this function. INAO is a public administrative institution in France forming part of the Ministry of agriculture, food and forestry, whose mandate includes the protection of French PDOs and GIs in France and abroad. CIVC, on the other hand, is a trade association established by French Law in 1941 to protect and administer the common interests of the Champagne industry.

Not a toast, but a challenge:

When CIVC and INAO became aware of the application for the NERO CHAMPAGNE trade mark, they weren’t exactly popping corks. The decision was made to oppose Nero’s application on the basis that NERO CHAMPAGNE is likely to take unfair advantage of the reputation associated with “Champagne” as a protected GI.

After six years, this dispute found its way to the EU General Court, where the opponents were supported in their opposition by both the French and Italian Republics. While the French government’s stance against NERO CHAMPAGNE is unsurprising given Champagne’s sparkling status in the French crown, perhaps the Italians haven’t forgiven Nero for fiddling as Rome burnt?

Ultimately, the Court was faced with three key issues:

Lawful use:

Can a trade mark include a PDO like “Champagne”, even if the mark is for genuine Champagne?

The opponents argued that while use of a PDO is lawful if the product concerned complies with the required specifications, this does not necessarily allow a proprietor to register the PDO as part of the product’s trade mark.

The Court disagreed, but found that while a PDO can be included in a trade mark in principle, if the product concerned falls foul the EU regulations governing PDOs, then the use of the PDO is unlawful and the mark should be refused.  This will be the case if the product does not comply with the PDO’s specification; or exploits the reputation of the PDO; or contains any other false or misleading indication as to “the provenance, origin, nature or essential qualities of the product”.

Exploitation:

Does adding “NERO” to “CHAMPAGNE” amount to unfairly riding on Champagne’s reputation, even if the wine is authentic Champagne?

Nero and the EUIPO argued “no” and that the EUIPO practice of the so-called “limitation theory” is correct: if an application for a trade mark which includes a PDO is limited to goods that comply with the PDO, it must be presumed that use of that mark cannot, as a matter of principle, exploit the reputation of that PDO (i.e. no harm, no foul).

The Court found that while the limitation theory creates a presumption of no harm or exploitation, this presumption could be rebutted by cogent evidence. In deciding the matter, the previous court had regarded the limitation theory as an irrebuttable presumption, and therefore did not consider the opponents’ arguments that NERO CHAMPAGNE did, in fact, exploit the “Champagne” PDO’s reputation (despite complying with the PDO’s specification). These arguments included that the word NERO qualified the word CHAMPAGNE in the mark; and that services cannot, by definition, comply with the specification for a PDO (i.e. the limitation theory cannot apply to services like those in classes 35 and 41). The Court on appeal, therefore, held that the previous court’s approach constituted an error of law.

Misleading:

Would some consumers be confused into thinking NERO CHAMPAGNE meant “black Champagne” - a category of Champagne that doesn’t exist - simply because “nero” means “black” in Italian?

The Court found that Italian consumers might reasonably think “Nero Champagne” means either a dark or black variety of Champagne; or Champagne made from Italian grape varieties like Nero d’Avola or Nero Buono. Either way, it risked misleading consumers into believing in a new, exotic “black Champagne” made from varieties which do not comply with the Champagne PDO, given that Champagne wines can only ever be white or rosé, with the use of one or more of three grape varieties: Pinot Noir, Pinot Meunier and Chardonnay.

The Court accordingly rejected the application for NERO CHAMPAGNE in classes 33, 35, and 41 and in doing so uncorked a firm message: even if your wine is the authentic Champagne which complies with the specifications, you cannot just add your own name to the mix to create a more glamourous trade mark, if doing so exploits the “Champagne” PDO or risks misleading consumers.

Lessons in Preserving Provenance:

For brand owners: if you include a PDO in your trade mark and your product does not comply with the PDO’s specification (or even if it does, nevertheless exploits the PDO’s reputation or is likely to mislead consumers), prepare for trouble - and make it bubble!

For lawyers: the “limitation theory” is a rebuttable presumption, not an absolute defence.

For the rest of us: if you see “black Champagne” on the shelves, you may want to interrogate the bottle’s contents a little more closely before buying it!

When it comes to Champagne, the bubbles may be light – but the law is heavy. Nero’s application fizzed out, reminding us that PDOs guarantee origin and quality. In South Africa, many GIs are protected through international treaties and local legislation such as the Liquor Products Act and the Merchandise Marks Act, the idea being that when South African consumers buy Champagne, they can be sure it is the “real deal”.

Written by Jeremy de Beer, Associate; supervised by Eben van Wyk, Partner at Spoor & Fisher