Joshua Teoh explains an interesting case on geographical indications in Malaysia.
WHAT IS A ‘GEOGRAPHICAL INDICATION’?
A geographical indication is used to identify the specific geographical origin of a product and associate the product with the quality, reputation, or other characteristic usually attributed to products from the same geographical origin. Geographical indications may be used for any product; for example, agriculture – Ceylon tea, food – Kobe beef, spirits – Champagne, and accessories – Swiss watches.
As a product’s origins suggest to consumers that the product will have a prescribed quality or characteristic which consumers may prefer, the use of a geographical indication may increase the value of the product itself. Thus, producers in a geographical area would seek to restrict and prohibit third parties from misusing any designation indicating that such goods originate from that area when that was never the case.
THE “TEQUILA” GEOGRAPHICAL INDICATION
The “Tequila” indication is owned by Mexico, through the Mexican Institute of Industrial Property (“IMPI”). IMPI had appointed Consejo Regulador del Tequila AC (“plaintiff”), the Mexican tequila regulator, to register “Tequila” as a geographical indication. The plaintiff is the only organisation accredited to certify compliance with the official Mexican standard for the production and marketing of “Tequila” alcoholic beverages.
In Malaysia, the plaintiff is the registered proprietor of the geographical indication “Tequila” bearing Geographical Indication No. GI2015-00002 for alcoholic beverages in Class 1.
In Consejo Regulador del Tequila AC v Pelican Winery (M) Sdn Bhd
(KLHC Civil Suit No. WA-24IP-17-08/2017), the High Court found, inter alia
, that the reference to “Tequila” used on the labels of products not distilled within the designated municipalities in Mexico was misleading as to the geographical origin of the product.
FACTS OF THE CASE
The defendant, a Malaysian alcoholic beverages manufacturer and distributor, had manufactured and marketed, among others, an alcoholic beverage product bearing the name Tequila Gold and the trademark “Agawa” (“AGAWA Tequila Gold”). The defendant claimed that as the tequila ingredients were imported from authorised producers in Mexico, the product could be lawfully referred to as “Tequila”.
The defendant also argued that since the product complied with the health regulations in Malaysia and is certified safe for consumption, there was no deception practised upon members of the trade and public.
The plaintiff contended, among others, that the use of the reference to “Tequila” on the defendant’s product label would misleadingly suggest that the AGAWA Tequila Gold product originated from an authorised manufacturing facility in Mexico and complied with the mandatory official Mexican standard for “Tequila”.
In a surprising turn of events, on the day that the High Court was to deliver its decision, the parties agreed to a consent judgment which included the defendant being restrained from using the geographical indication “Tequila” on its products. Notwithstanding and without prejudice to the consent judgment, the High Court proceeded to render its decision and reasoning, to provide clarification on section 5(1) of the Geographical Indications Act 2000 (“GIA”), which states that any interested person may institute proceedings to prevent, among others, the misuse of geographical indications.
PROVING THE ‘GEOGRAPHICAL INDICATION’
The High Court was satisfied that “Tequila” is a geographical indication as defined under section 2 of the GIA with the plaintiff’s production of the certificate of registration for “Tequila”. The certificate was accepted as prima facie
evidence of a registered geographical indication pursuant to section 20(2) of the GIA. The High Court agreed that the use of ‘Tequila’ indicated that the specific alcoholic beverage originated from one of the 181 municipalities in five designated Mexican states, namely Jalisco, Guanajuato, Michoacán, Nayarit, and Tamaulipas.
WHO IS AN ‘INTERESTED PERSON’?
Section 2 of the GIA defines an ‘interested person’ as persons specified in section 11 of the GIA. Section 11 sets out the categories of persons who are entitled to apply for registration of a geographical indication.
The High Court, reading sections 2, 5(1), and 11 of the GIA together, found that although the plaintiff was a non-profit organisation, the plaintiff as the registered proprietor of the registered geographical indication for ‘Tequila’ is an ‘interested person’ who may institute proceedings under section 5(1) of the GIA to, among others, prevent the misleading use of the ‘Tequila’ geographical indication.
The High Court observed that the GIA only recognised two exceptions: for prior use or use of a personal name. Hence the Court held that the fact that the tequila ingredients used in the defendant’s products were imported from two authorised tequila producers in Mexico (the ones who complied with the Mexican standard for ‘Tequila’ and were authorised by the plaintiff) could not be used as a defence in this case.
The High Court also rejected the defendant’s reliance on the Food Regulations 1985 and the food safety certificates issued by Ministry of Health as a defence. It was observed that any contravention of the Food Regulations 1985 is a separate offence, and that such a defence was also rejected in the case of The Scotch Whisky Association & Anor v Ewein Winery (M) Sdn Bhd
 6 MLJ 280, a case on extended passing off.
DECISION OF THE HIGH COURT
Accordingly, the High Court held that the plaintiff had established its case pursuant to section 5(1)(a) of the GIA, that the use of the word “Tequila” in the name of AGAWA Tequila Gold and in the designation by way of ingredients in the label of the product fell within section 5(1)(a) as they misled the public as to the geographical origin of the goods.
The High Court further found that pursuant to section 5(1)(b) of the GIA, the defendant’s presentation and ingredient designation of “Tequila” in the AGAWA Tequila Gold product amounted to an act of unfair competition which is prohibited under Article 10bis
of the Paris Convention, in that they are liable to mislead the public as to the “nature” and “characteristics” of the goods.
Cases on the misleading use of geographical indications in Malaysia are rare even though the GIA is about to celebrate its 20th
anniversary. Thus far, the only reported Malaysian case on this subject is Maestro Swiss Chocolate Sdn Bhd & Ors v Chocosuisse Union Des Fabricants Suisses De Chocolat (a co-operative society formed under title XXIX of the Swiss Code of Obligations) & Ors and another appeal
 2 MLJ 359 which concluded in the Federal Court. This High Court decision may, possibly, be the second local case on misleading geographical indications.
In recognising the plaintiff, a competent authority on tequila, as an “interested person”, the High Court’s reasoning was consistent with sections 2 and 11 of the GIA and the obiter dictum
in Maestro Swiss Chocolate Sdn Bhd
As mentioned earlier, a registered geographical indication has the purpose of protecting the unique attributes of a product which originates from a particular geographical region. The High Court’s decision is interesting as it held that the use of a geographical indication to describe an ingredient on a label could amount to a misleading use of a geographical indication, even though the ingredient originated from the location designated in the geographical indication.