News Analysis: Provenance or Protectionism?

Article excerpt

Budvar believes the advantage of joining the EU's 'protected status' club is all in the marketing.

The long-running dispute between Czech premium beer Budweiser Budvar and Anheuser-Busch giant Budweiser took a new turn last week, when the European Union awarded Budvar Protected Geographical Indication (PGI) status (Marketing, 5 May).

This sees Budvar enter an exclusive club of European products, whose members include Cognac, Champagne and Parmesan cheese. These products have such strong affinity with their origin and tradition of manufacture that the EU feels they should enjoy 'protected designation of origin'.

This prevents, for example, Parma ham from being sliced and packed anywhere other than in the Italian town of Parma. The rule stopped Asda selling its own version of 'Parma' ham in 2003, because the meat used in the product was produced in the UK.

As a means of protecting EU members' most famous products, the PGI system is inherently political, not least when used as a defence against a US aggressor such as Anheuser-Busch. As Michael Bilewycz, director of trademark law specialist Markforce Associ-ates, says: 'PGI has become a trade and competition issue between Europe and the rest of the world.'

Opposing views

The World Trade Organisation, and the US in particular, are unhappy with PGI, seeing it as hindering free trade and smacking of European protectionism.

For its part, the EU rails against situations such as genuine Parma ham not being allowed to be sold in Canada as local producers have trademarked the name. And, if it needed to prove this is not a case of being anti-US, the EU can point to the fact that it used PGI to prevent British producers from selling Feta cheese, saying that the term can only be applied to sheep or goats' milk churned in Greece.

The EU is also indignant that Budvar, brewed in Czech town Ceske Budejovice since 1895, has to be called CzechVar in the US and, in many countries, cannot be stocked alongside the Anheuser-Busch brand. But while the PGI ruling will help put an end to those restrictions on Budvar in the EU, it will bring about little change in the wider world.

'While PGI is one of the most effective forms of competitive protection that you can get inside the EU, the level of protection is limited outside,' confirms David Thual, secretary general of OriGIn, a lobby group backing geographical indication of products.

The legal details of Budvar's EU victory are not the important factor.

Budvar and Budweiser have been scrapping all over the world for years, and are engaged in legal action in 40 countries, with the latest ruling in Budvar's favour coming from Cambodia. …