Member States must prevent unlawful uses of GIs also in exports, says CJEU in Feta case (C-159/20)

In its ruling delivered last week, the Court of Justice of the European Union (CJEU) found that Denmark had breached its obligations under Regulation (EU) No 1151/2012, by failing to stop the use of the Greek PDO “Feta” on cheese produced in Denmark and intended for export outside of the EU (case C-159/20).

The ruling originates from two complaints of the European Commission against Denmark over the production for exports of cheese under the name “Feta”, that is: “Danish Feta” and “Danish Feta cheese”. According to the Commission, Denmark had breached its obligations under Art. 13(3) Regulation (EU) No 1151/2012, as well as Art. 4(3) of the Treaty of the European Union (TEU) by weakening the EU’s position in international negotiations concerning the protection of registered names.

Denmark did not contest that such production had taken place on its territory. However, it argued that Art. 13(3) Regulation (EU) No 1151/2012 would not cover exports.

Under Art. 13(3) Regulation (EU) No 1151/2012,

“Member States shall take appropriate administrative and judicial steps to prevent or stop the unlawful use of protected designations of origin and protected geographical indications […] that are produced or marketed in that Member State.”

This provision was introduced during the 2012 revision of geographical indications’ (GI) legislation in response to the CJEU ruling in the Parmesan case (C-132/05). There, the Court pondered whether EU Member States have an obligation to take, on their own initiative, the measures necessary to deal with GI infringements. The case was based on the earlier Regulation No 2081/92. In the view of the Commission, which filed a complaint against Germany, although Regulation No 2081/92 did not expressly require EU Member States to take ex officio actions, Germany should have given instructions to its government bodies to bring to an end the marketing on German territory of products designated as ‘Parmesan’. The CJEU disagreed with the Commission and interpreted Regulation No 2081/92 narrowly. It opined that Germany was not under any obligation to act against GI infringements on its territory beyond the obligation to create the necessary legal framework.

Learning from its “mistakes”, the Commission introduced Art. 13(3) during the subsequent revision of the legal framework, obliging Member States to take appropriate administrative and judicial measures. This provision is also reiterated as such in the recently presented Proposal to review the GI system (Art. 42(2)).

In her Opinion in case C-159/20 [highly recommended by this Kat!], Advocate General (AG) Ćapeta recognized that Art. 13(3) Regulation (EU) No 1151/2012 does not expressly indicate that it applies to exports to third countries. Thus, remarked the AG, the interpretation of Art. 13(3) “is not obvious” (para. 24).

The AG identified two possible interpretations, which she referred to, respectively, as “intellectual property interpretative framework” (that of the Commission) and “trade liberalisation interpretative framework” (that of Denmark). While the Commission’s view relied on the paramount importance of GIs for local communities, Denmark defended that obstacles to trade should be an exception, not the rule. Moreover, Denmark argued that recognizing that exports fall under the scope of Art. 13(3) runs contrary to the principle of legal certainty.

The AG recommended the Court to apply the intellectual property interpretative framework. Among other arguments, the AG justified this by the need to safeguard the competitive position of the EU GI producers in third countries. As the AG argued, the EU cannot regulate the markets of third countries by its own legislation, nor can it prevent the selling of “Wisconsin Feta” in third countries. Yet, the EU can act upon “Danish Feta” (para. 62).

The CJEU essentially endorsed the conclusions of the AG. In its ruling, the Court found that Art. 13(3) does cover products, intended for export to third countries.

This follows from the wording of Art. 13, which covers “any use” of a protected name (para. 47). That is, it also includes products, not covered by the GI, that are manufactured in the Union and intended for export to third countries. This interpretation is confirmed by the Regulation’s objectives to secure producers with a fair remuneration for the qualities of their products, and to guarantee the respect of intellectual property rights (paras. 58-60). Thus, Denmark has indeed failed to fulfil its obligations under Regulation (EU) No 1151/2012 by failing to stop the use of PDO “Feta” in exports.

The Court however considered that Denmark had not breached its obligation under the principle of sincere cooperation, referred to in Article 4(3) TEU. In this regard, the AG recalled that the fact that a Member State has a different understanding of EU law than the Commission does not amount in itself to an infringement of the principle of sincere cooperation (para. 84 of AG Opinion). The Court noted that no information had been provided by the Commission to prove that Denmark attempted to undermine EU negotiations on GIs. 

Just as its predecessor — C-132/05 — the ruling in C-159/20 will surely find its way in the subsequent revisions of EU GI legislation.