GEOGRAPHICAL IDENTITY IN GLOBAL MARKETS

Case Name – Tea Board of India v. ITC Limited & Ors.

Citation – 2011 SCC OnLine Cal 416

Court – Calcutta High Court

Coram – Justice Sanjib Banerjee

ABSTRACT

Another question, which was put into the forefront with respect to the law in India, about the actual 

amount of protection being rendered to the GI was decided by the Calcutta High Court in the case of Tea Board of India v. ITC Limited. Here is how it played out: ITC was using the name and logo of “Darjeeling” while serving tea in its luxury hotels. It was argued by the Tea Board of India, who were the registered GIs owners of “Darjeeling”, not only did ITC infringe on their IP, but that its usage devalued the prestige that surrounds genuine Darjeeling tea. It examined India’s Geographical Indications of Goods (Registration and Protection) Act, 1999 and determined whether hotel services or blended tea were a form of infringement upon a GI. This decision had revealed some fundamental flaws with the Indian GI system. It led to argument about GI dilution, the potential for consumer confusion, and the level of protection afforded to India’s internationally celebrated GIs.

INTRODUCTION

Imagine entering a 5-star hotel and ordering tea from the menu only to find the world-famous Darjeeling certification mark next to it. Your presumption that you’re getting the genuine Darjeeling tea, that crisp, muscatel flavored brew from the mist- shrouded hills of West Bengal is indeed a pure one, but your assumption may be very wrong. What you have in your cup is possibly a little less Darjeeling tea than any other varieties from much cheaper sources. This was the dilemma in the case of the Calcutta High Court in 2011 that dealt with the very essence of what a Geographical Indication is all about.

Geographical Indications are not just the marketing gimmicks, they are legal assurances of quality-a promise that the product originates from the said territory and possess the attributes associated with it. India, being the first country to grant a GI under separate domestic legislation did a pioneer deed when in 2004-05 it certified Darjeeling tea as GI application No.1. The case Tea Board v. ITC demonstrated that mere certification is just the first step. The real challenge is the enforcement; it is preventing powerful business interests from piggy-backing on a reputation born of the name.

FACTS OF THE CASE

The statutory body established under The Tea Act, 1953 that is authorized to regulate and promote the Indian tea industry is Tea Board of India. This body is registered proprietor of Darjeeling GI (GI Application No.1) and also owner of distinct Darjeeling logo- which is certification mark that authorized tea producers can print on authentic Darjeeling tea.

ITC Ltd which is one of India’s largest business groups, operates the chain of luxury hotels under brand ‘ITC Hotels’. At ITC hotels, ITC provided a service that had ‘Darjeeling’ in its name and displayed Darjeeling certification mark on its printed menus and other promotional materials while serving tea that is not 100% Darjeeling and is a blend which includes Darjeeling tea as only one among the various ingredients.

Tea Board brought the suit seeking permanent injunction to restrain ITC from using the Darjeeling GI and certification mark on a blended product. ITC resisted the suit mainly on following points: (i) GI Act covers goods only and not services and usage of the mark in context of a service offered in a hotel cannot constitute infringement; (ii) that the mark was not used as a misrepresentation but descriptively.

ISSUES BEFORE THE COURT

The court had to determine the following issues:

1. Can a GI be protected in a service context (as opposed to goods) under the provisions of Geographical Indications of Goods (Registration and Protection) Act, 1999?

2. Whether the manner in which ITC used the Darjeeling GI and certification mark on the menus of its hotels while serving a blended tea, amounted to infringement or passing off under the GI Act and under common law?

3. Does printing a GI certification mark on a service menu without fulfilling the quality and origin criteria provided for the GI constitute misrepresentation to the consumers?

REASONING

ITC’s Defence –

ITC’s first defense was that the GI Act is a goods law and not applicable at all to services and hotel services. ITC’s argument was that putting Darjeeling on the hotel menu was similar to putting description of the tea that would be available – it is a description of the service not of the GI. ITC also argued that the Darjeeling mark was used in its descriptive sense and not as certification mark and the smart hotel customer would never mistake it as real pure Darjeeling tea.

The Court’s Ruling –

The Court of Calcutta disagreed with ITC’s narrow definition of the GI Act. The Court found that the GI and the protected area under the GI cannot be artificially divided into goods versus services context when the end result to the customer is same. The customer looking at “Darjeeling tea” on luxury hotel menu accompanied with an official logo of Darjeeling GI would naturally conclude it is pure and authentic Darjeeling tea which has all the standards that the GI stands for.

The Court strongly made its point by stating that the damage cause to the GI would be no less, if not more, in case of a service than in case of a product. If a customer is cheated by the usage of the mark in a case of product (e.g. Tin can with false Darjeeling tea logo in a shop) there is no reason as to why customer is not cheated when in a luxury hotel he is given inferior quality tea under an illusion of being provided “Darjeeling tea” for which he is paying a premium. ITC, therefore used the Darjeeling mark as a certification mark. The Court came to the conclusion that use of the mark was an act in derogation of the quality associated with the registered GI.

The passing off argument –The Court ruled that, the goodwill of the Darjeeling name and logo vested in the registered users of the Darjeeling mark that abide by the required quality standards and cannot vest in anyone who just happens to have Darjeeling tea as one of its ingredients. The court found the usage of the mark by ITC an act in derogation to the goodwill, which is likely to cause damage to the Tea Board and to the genuine producers of Darjeeling tea.

CRITICAL ANALYSIS

The Kolkata High Court’s judgment should be lauded for a purposive reading of GI. Purposive constructions of statutes that examine the objective, rather than solely the letter, are especially useful in a subject such as intellectual property where shrewd business entities may easily find technicalities to defeat the legislative purpose. If the court had ruled in favor of ITC and limited the application of the GI Act to goods, there would have been a massive lacuna in enforcement – GI misuse by the service sector, for instance -hotels, restaurants, spas claiming exclusive rights to regional product names by simply imbuing luxury and prestige-would remain untrammelled.

The judgment is not entirely tension-free. The conclusion that there is a legitimate issue as to how much Darjeeling tea a mixed product has to be to legally bear that name may be viewed critically by certain factions. The GI Act and the Tea Board’s regulations stipulate that only tea produced in the Darjeeling district that meets prescribed standards is eligible for the certification mark. The blending of tea, as the argument suggests, clearly does not meet this standard if a product is mostly made up of tea from outside the Darjeeling region. The judgment fails to clearly lay down the quantitative measure to distinguish if an 80% Darjeeling blend could legally be branded “Darjeeling” as correctly reasoned.

This case brings to the fore the inherent disparity in power between big business and individual producers or communities. ITC is a corporate giant and its employees possess vast resources; individual tea growers and owners in the delicate Darjeeling region have minuscule assets. The idea behind GI system is to give the latter power, i.e. A tool, to guard against exploitation by larger enterprises. The High Court’s decision correctly upholds this rationale by ensuring that the authority rests with the Tea Board. What remains crucial is how efficiently and consistently this authority is exercised: no matter how good the law is in itself, it cannot stand if the body in charge is incapable or unwilling to effect it.

The EU framework governing PGI and PDO has established ongoing audits, and it is the state that is vested with the enforcement of the specific standards of a GI. In contrast, the Indian GI regime seems to be primarily reactive, with litigation filed by the Tea Board, which may only be capable of responding to instances of actual misuse, rather than proactively deterring such use. This case may be considered a fine example of both the potential and the structural limitations of India’s GI regime.

SIGNIFICANCE AND IMPLICATIONS

This decision means far more than just for Darjeeling tea. It shows that Indian GI protection isn’t merely a narrow, technical defense; it’s a substantive prohibition against misleading the consumer-wherever a GI mark is presented, goods or services context. For hotels, the message is clear- you may not piggyback on a GI-protected mark unless your product has been produced to its standards.

For Darjeeling tea producers, this gives a useful precedent. The four-fold difference between the quantity of tea produced and sold in the Darjeeling name-10,000 odd tonnes produced vs 40,000+ tonnes sold-tells of the scale of the problem. Any misuse damages the premium real producers could claim. A legal precedent which states even the powerful hotel industry cannot misuse the mark, is the best weapon producers can add to their legal armory.

But all this raises the question of the need for legal amendments. The GI Act must make it clear that misuse of GI in the services domain constitutes infringement, fix ambiguities in the percentage of blending allowed in the product, and empower individual authorized users to pursue infringement action independently-without the need for a reference from the Tea Board. Provisions on supply chain traceability, routine audits for compliance and creation of GI units within law enforcement agencies would further strengthen the regime. The Indian GIs are valuable economic assets; the laws protecting them must be as potent as their heritage.

CONCLUSION

The decision in Tea Board of India v. ITC Limited hinges on a very simple question-can you call something Darjeeling tea if it isn’t actually Darjeeling tea?- and a straightforward ‘no.’ It reconfirms that the intention behind GI must be interpreted purposefully; deceptive practices within a services context are just as harmful as in a goods context, and a common, geographic good cannot be unfairly appropriated by a private concern which fails to abide by the GI rules.

The judgment has raised issues which are unresolved and can only be tackled by new legislation-primarily, concerning blending limits and the ability to enforce these. But as a statement of principle it is firm and unassailable: a Geographical Indication is an assurance. When a consumer sees the mark Darjeeling, it can and should be guaranteed what goes into their cup. It is upon this guarantee that the entire GI system rests, and that assurance must be protected.

REFERENCES

Geographical Indications of Goods (Registration and Protection) Act, 1999 (Act No. 48 of 1999).

Tea Act, 1953 (Act No. 29 of 1953).

Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), 1994, Arts. 22-24.

Tea Board of India v. ITC Limited & Ors., 2011 SCC OnLine Cal 416 (Calcutta High Court).

Tea Board of India v. Hartkorn Gewurze GmbH, Landgericht Hamburg (Hamburg Regional Court), Germany.

GI Registry, Application No. 1 (Tea Board of India — Darjeeling Tea), Registered 2004-05.

Dev Gangjee, Relocating the Law of Geographical Indications (Cambridge University Press, 2012).

Kasturi Das, ‘Protection of Geographical Indications: An Overview of Select Issues with Particular Reference to India’ (2007) 10(3) Journal of World Intellectual Property 289.

P. Narayanan, Law of Trade Marks and Passing Off (6th edn, Eastern Law House, 2004).

Srividhya Ragavan, Protection of Traditional Knowledge (Springer, 2012).

Tea Board of India, ‘Darjeeling Tea GI: Registration and Enforcement’ (Official Publications, GI Registry, Chennai).