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DPIIT, MCI Chair on Intellectual Property Rights &

Centre for Intellectual Property Rights Research and Advocacy

National Law School of India University, Bangalore

“Socio-Economic and Rural Development Through

Geographical Indications”

Under the Guidance of

Prof. (Dr) T. Ramakrishna,

MCI Chair Professor on IPR

Submitted By

Badugu Surya Chandra

B.A., LL.B.[Hons.]- 2nd Year

Damodaram Sanjivayya National Law University

Visakhapatnam

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Certificate

This is to certify that Badugu Surya Chandra, student from Damodaram

Sanjivayya National Law University [DSNLU], Visakhapatnam, has

successfully completed and submitted his report, Socio-Economic and Rural

Development through Geographical Indications. This has been submitted in

fulfilment of his internship at the Centre for Intellectual Property Research and

Advocacy (CIPRA)- National Law School of India University [NLSIU],

Bangalore during the month of 1st December to 31st December 2020.

Bangalore, 21st January 2021

Prof. (Dr.) T. Ramakrishna

DPIIT, MCI Chair Professor of IPR

Research Associate

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DECLARATION

Certified that this research work is my original work and I have not borrowed

any material from other’s work nor have I presented this partly or fully to any

other institution/college/university.

I have completed with all the formalities prescribed in this regard.

Date: 21st January 2021 Signature

Place: Bangalore NAME- Badugu Surya Chandra

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ABSTRACT

The socio-economic development promise for rural communities comes with Geographical

Indications (GIs). This paper is an effort to find out the nature and significance of Geographical

Indication Protection. It also helps to enhance the awareness of geographical indications

through rural growth, increased social benefits, economic benefits, environmental benefits,

benefits for consumers and benefits for producers, etc.

RESEARCH QUESTION

Whether Geographical Indications (GIs) coming with the promise of socio-economic and Rural

development for rural communities.

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CONTENTS

• Introduction -------------------------------------------------------------------------------- 5

• Role of GI in Rural Development and benefits ------------------------------------- 5

• Incorporating CSR/Fair-Trade into the Geographical Indication System --- 7

• Imposing positive requirements as a precondition for the use of GI’s -------- 8

• Conclusion --------------------------------------------------------------------------------- 10

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INTRODUCTION

Geographical indications open door for consideration of many more different items identified

with the geography, climatic conditions etc. The concept of Geographical Indication began in

nineteenth century Europe. GIs are identified by the World Trade Organization (WTO) as:

"indications identifying a good as arising in the territory of a country or locality or region of

that country, in which the standard, reputation or other attribute of the good is essentially

attributable to its geographical origin". Geographical Indication is an aggregate approved right

to invent that identifies an item as originating from a specific location, and the features or

prestige of an item or good originating from that place of origin. By passing product data, GI

fills up as a marketing tool. The security of GI1 is more oriented towards agricultural products;

it protects not only the characteristics of agricultural products, but also all the factors involved

in the manufacturing process in order to make them available to the public on the market.

Calboli (2015) claimed that a name or sign used on items relating to a particular geographical

place or origin is a geographical indication. In order to define product quality, highlight brand

identity and credibility, geographical indications are considered. It has a significant role to play

in maintaining cultural values. A geographical indication cannot be assigned or licenced to a

person not belonging to a group of authorised producers outside that area. In Europe, GI

protection is found, other developing nations have lately begun to update GI enactment locally

and pursue protection in foreign trade agreements with the goal of fostering rural development

and protecting local heritage and natural condition.

ROLE OF GEOGRAPHICAL INDICATIONS IN RURAL DEVELOPMENT

In addition, geographical indications may provide a powerful rural advancement tool that has

been viewed by the EU as reflected in various policies and regulations. This rural development

ability will require developing countries to understand and promote origin-labelled goods

within their jurisdiction as an exceptionally strong base. In rural areas, the security of GI goods

promotes the tolerance of commercial events. GIs are typically conventional goods made by

rural communities. In rural development, the role of geographical indication relates to the

following aspects:2

1 Amit, sing. Tulip. Suman. & Tripura, V. (2015). Interfaces and synergies between Intellectual Property right and

Consumer Protection Law in India: An analysis. Journal of Intellectual Property Rights. 20. 2001-09. 2 Carina, Folkeson, Geographical Indications and Rural Development in the EU, pp15.

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Social Benefits

Development of separate agricultural products needed by the minority of consumers due to the

nature of the commodity, the climate of protection and prospective unity. The production area

and the goods are linked, the speak to a secure comparative preferred stand point, which can

be used as a force for encouraging economic activity in remote and or under privileged territory.

These safe products can provide an opportunity for the region or area because of GI; they can

create job opportunities that can personally lift the financial status of inhabitants, which can

also prevent rural exodus to urban areas. Local producers can upgrade their product's credibility

with the aid of GI and can sell directly, in this way it can additionally go up against huge

organisations and GI's reputation can boost the region or region's distinction. GIs are therefore

seen as a factor in rural financial growth and in strengthening the economy.3

Economic Benefits

Producers of legitimate goods may charge a price premium by retaining a particular lowest

standard of quality and asserting this to the customer, and customers may retaliate by

decreasing future purchases if quality does not satisfy desire. Producers depend on the way

customers compare GI-designated goods to a separate GI-designated region in order to capture

the respect associated with products bearing their GI. GI manufacturers need protection from

legal guarantee against confusing employment of words identical or similar to their GIs. They

claim that they need protection against free riders who might use the GIs beyond their precise

geographical sense, not with sanding when customers are not confused, as these "non-

geographically accurate" uses could lead to the loss of the GIs' peculiarity.4

Consumer’s benefits

Geographical indications are aimed at providing customers with information on the nature and

characteristics of products on a regular basis. This will potentially engage customers to make

more informed purchase decisions. In fact, this rather superficial now and then, but the same

can be said for the most part of ads and trade mark in particular. All things considered;

geographical indication is a little different. Geographical indication can provide important

information on the origin, safety and 'quality' of geographical indication products by telling the

3 Irene, Calboli. (2015). Geographical indications of origin at the cross roads of local development, consumer

protection and marketing strategies. International review of intellectual property and competition law. 47 (7). 760-

780. 4 Cerkia Bramley. The Economics of Geographical Indications: Towards A Conceptual Framework for

Geographical Indication Research in Developing Countries. Wipo-pub1012-chapter4.pdf.

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customer about the origin of the natural substance and the training that goes into producing the

articles.

Producer’s benefits

Geographical indications raise local producers' incomes and meet the needs of more aware and

demanding entrepreneurs. Amit et al (2015) suggested that producers suffer losses and harm as

they reduce their significant business and damage their built-up credibility for the products. So,

for producers, the protection of geographical indications is very critical. Geographical

indications show the greatest opportunity for local producers to benefit where conventional

small-scale manufacturing is still present on the supply side, and where end-use goods are

advertised to customers directly. In other words, when the object is a commodity that is

fundamentally traded in bulk, they are less likely to suit (Downes and Laird (1999)). This

confirms the ability to use the economic advantages of geographical indications to boost

prosperity for local communities in the developing world.

INCORPORATING CSR/FAIR-TRADE INTO THE GEOGRAPHICAL INDICATION

SYSTEM

Before determining how the GIs system could be used to bring about more equity into

value/supply chains, it is sensible to set out the common standards shared by the CSR and fair-

trade models considered above. These common standards could provide the basis for a

framework to reconsider the GIs system. Accordingly, the CSR/fair-trade models share the

following common standards:

Fair wages/reasonable prices: CSR initiatives aimed at creating shared value have

focused on guaranteeing fair wages not only in respect of employees within the

corporate structure of a company but also across its supply chains. As the LEGO and

Nestlé examples demonstrate, suppliers involved in a product’s value/supply chain are

independently audited to ensure that labourers/workers employed by the suppliers are

paid a fair wage. The fair-trade model ensures that farmers/producers are paid a

minimum price for their produce by the industry players. When employees and workers

throughout the value/supply chain of a product are paid a minimum and reasonable

wage or price, this improves productivity and enriches the long-term sustainability of

the product.

Better working conditions: by focusing on the health and safety of employees not only

within a company but also across value/supply chains, CSR initiatives strategically

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create shared value among the various stakeholders especially at the grassroots. A

similar strategy is employed by the fair-trade model, where funding (e.g., the Fairtrade

Premium) is provided to farmers’ organisations to improve farming conditions. Just as

fair pay and prices, better working conditions increases productivity and sustains long-

term value/supply chains.

Education and training: providing employees and stakeholders connected with a

company’s business with education and training, particularly in a field related to the

company’s business, is a CSR strategy that could generate considerable shared value.

The fair-trade model too focuses on training farmers and producers. These initiatives

could foster innovation among stakeholders, leading to sustainable and efficient

methods of production.

Protection of human rights: CSR and fair-trade initiatives that focus on supply/value

chains guarantee compliance with human rights norms. This commitment, in effect,

shapes labour and working conditions across supply/value chains. By committing to

protect human rights, practices that lead to unfair or discriminatory labour, such as the

payment of excessively low wages or providing unsafe working conditions, as well as

the use of children in the workforce, can be suppressed.

If industry actors dealing with GI products embrace the aforesaid common standards (which

we refer to as ‘non-GI standards’, as they do not relate to the origin, quality or characteristics

of GI products), in effect, that could facilitate GI premiums to be more equitable distributed

across supply/value chains. However, both CSR and fair-trade remain voluntary initiatives.

Therefore, it becomes necessary to determine whether the legal framework for the protection

of GIs could be utilised to incentivise compliance with the common non-GI standards that we

have identified above. A consequential question that must be addressed is the extent to which

governments/states could regulate GIs within the framework of TRIPS and obligations flowing

from it. These matters are considered next.

IMPOSING POSITIVE REQUIREMENTS AS A PRECONDITION FOR THE USE OF

GEOGRAPHICAL INDICATIONS

GIs add significant value to the products to which they are attached. As was noted before, GIs

guarantee that the underlying products originate from a particular geographic region and attract

certain specific qualities that arise as a result of their place of origin. For this reason, GIs play

a crucial role in communicating the ‘product/place’ linkage to consumers. If products bearing

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GIs, such as Ceylon Tea, Darjeeling Tea or Hom Mali Rice were stripped off their respective

GIs, they would no longer be regarded as premium products by consumers.5 For this reason, it

is crucial for GI products to display their respective GIs on packaging and labels. Thus, it is

clear that the use of GIs on product packaging or labelling play an important role in the

marketing and sale of GI products. This necessity may be exploited to encourage, if not

incentivise, industry actors dealing in GI products to adhere to the common non-GI standards

that we have set out above.

The establishment of an institutionalised framework that promotes the cooperation of

government officials, producers and those involved in the exportation, distribution and

marketing of GI products is crucial for the success of a GI.6 Thus, whether GIs are protected

as certification marks or are registered in a GIs register, they must be administered by a

centralised body that warrants, and maintains control over, the origin, quality and

characteristics of the corresponding GI products. Accordingly, the certification or registration

process requires the centralised body, as a representative of the state and community of

producers, to set out the boundaries delineating the geographic region and conditions/standards

upon which the GI products are produced within that region. For instance, in the case of teas,

the Ceylon Tea and Darjeeling Tea GIs are owned and controlled by the respective Tea Boards

in Sri Lanka and India. Similarly, in the case of Hom Mali Rice, Thailand’s Ministry of

Commerce controls that GI. As a consequence, products (such as tea or rice) that are produced

outside the specified regions relating to a GI or that do not meet the specified GI standards,

will not qualify for the use of the GI on packaging and labels. Any attempt to do so could

potentially lead to an action for infringement at the instance of the entity responsible for the

administration of the GI, or one of its authorised licensees. In other words, the entitlement to

use a particular GI stems from complying with certain standards set out in respect of that GI

by a centralised body, which is often a government ministry or statutory body. This interplay

between the registration, use and the centralised monitoring of GIs may be put into good use

to ensure that industry actors that make use of GIs in promoting their products adhere to the

common standards that we identified above that relate to non-GI elements such as

5 Megha, Ojha. (2017). geographical indications and rural development; opportunities and economic impact of

protection of fruit crops in India. International Research Journal of Human Resources and Social Sciences. 4. (11). 6 Felix Addor and Alexandra Grazioli, Geographical Indications beyond Wines and Spirits: A Roadmap for a

Better Protection for Geographical Indications in the WTO/TRIPS Agreement’ (2002) 5 Journal of World

Intellectual Property 865, 893.

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fair/reasonable wage and prices, access to education and training, safe working conditions, and

so on.

As a matter of policy, the body responsible for administering a GI, could require compliance

with non-GI standards, in addition to the GI-specific standards, before authorising industry

actors to use the GI on their packaging or labels. This way, if an industry actor is to benefit

from the use of a GI, it must, in addition, also adhere to specified non-GI standards that aim to

ensure that GI premiums are better distributed throughout supply/value chains for the benefit

of the stakeholders at the grassroots. This approach contemplates the attachment of a positive

obligation on the part of industry actors to comply with additional non-GI standards before

deriving the entitlement to use a GI on product packaging and labels. Given that the use of GIs

on retail packaging and labels is crucial for enabling consumers to distinguish between GI

products and non-GI products of the same class, industry actors are likely to be motivated to

comply with the additional non-GI standards in order to ensure that they are permitted to use

the GIs on product packaging and labels.7

CONCLUSION

Geographical Indication helps to create a relationship between the commodity and the region

from which the object belongs or originates. Through well-developed promotion and marketing

methods, economic activities in rural areas have increased, resulting in improved production

of GIs. In rural areas, most geographic regions are surrounded by rural areas. This creates more

rural growth opportunities. The objective of this paper was to highlight an inconsistency

between how GIs are perceived, as robust tools of rural development, and the reality that exists

at the grassroots, where some of our most treasured GI products come from. This paper does

not seek to question the utility of GIs in achieving rural development. Rather, it posits that there

are problems in how GI premiums are shared and distributed among stakeholders across

value/supply chains. In order to consider ways of addressing this anomaly, we looked outside

the GIs system for inspiration, which took us in the direction of CSR and the fair-trade system.

CSR has been strategically used by enterprises to create shared value on the part of

stakeholders, while the fair-trade model has been successfully employed to address poverty

among farming communities. Both the CSR and fair-trade models we considered share certain

common standards that seek to guarantee fair wages and prices, access to education and

training, healthcare and safe working conditions, and human rights to stakeholders involved

7 Michelle Agdomar. (2014) “Removing the Greek from Feta and Adding Korbel to Champagne: The Paradox of

Geographical Indications in International Law, 18 Fordham Intell. Prop. Media & Ent. L. J. 541,578-580

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across supply/value chains.8 These common standards are significant contributors towards

enriching the lives and livelihoods of communities in rural areas. Since GIs designate the

geographical origin of products, and are controlled and monitored by centralised bodies that

are responsible for guaranteeing the origin, quality and characteristics of GI products, the GIs

system can be effectively used to replicate the CSR/fair-trade models that we have considered

in this paper. In fact, there is a sound argument in favour of ensuring that those involved in the

production of GI products are treated fairly and with dignity, as the supply/value chains of GI

products are heavily reliant on local labour in the geographic areas from where the products

originate. Unless industry actors that deal in GI products are able to ensure the long-term

sustainability of supply/value chains, GI products will slowly but surely disappear with time.

The benefits of geographical indications are the preservation of people's monetary activities

and the improvement of their standard of living. People in rural areas are the main recipients

of GI goods that create more prospects for revenue and jobs. One of GI's key benefits is that it

sends direct signals to the ultimate customers that convey both the origin and the consistency

it possesses. Huge investments in ads can also be avoided. GI removes the search expense from

the customer component, and thus they are able to pay an additional premium for each

commodity. Since GIs designate the geographical origin of products, and are controlled and

monitored by centralised bodies that are responsible for guaranteeing the origin, quality and

characteristics of GI products, the GIs system can be effectively used to replicate the CSR/fair-

trade models that we have considered in this paper. In fact, there is a sound argument in favour

of ensuring that those involved in the production of GI products are treated fairly and with

dignity, as the supply/value chains of GI products are heavily reliant on local labour in the

geographic areas from where the products originate. Unless industry actors that deal in GI

products are able to ensure the long-term sustainability of supply/value chains, GI products

will slowly but surely disappear with time.

8 Winson, Thomas. (2013). Economic Competitiveness through Geographic Indications. International Journal of

Marketing, Financial Services & Management Research. 2 (9). 2277-3622.