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Darjeeling Tea Case Solution

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Case study solution of Darjeeling Tea: Global Infringement and WTO

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Darjeeling Tea Case Solution

  1. 1. Section A, Group 6: Darjeeling Tea: Global Infringement and WTO Darjeeling Tea: Global Infringement and WTO Section A, Group 6 Abhay Sharma (1A) Aniruddh Srivastava (9A) Devansh Doshi (16A) Manasi Jain (23A) Sachin Gupta (38A) Vidooshi Joshi (55A)
  2. 2. Section A, Group 6: Darjeeling Tea: Global Infringement and WTO Darjeeling Tea: Global Infringement and WTO Executive Summary: India is one of the largest producers and exporters of tea with an estimated annual production of 840 million kg of tea. Since 1935, tea is being cultivated, grown and produced in tea gardens in Darjeeling. The cool and moist climate, the soil, the rainfall and the sloping terrain all combine to give Darjeeling Tea its unique muscatel flavor (grapey taste) and exquisite bouquet. Its exclusive taste, Quality and Non- replication by any tea variety across the world, commands premium in the International Market. Because of its unique distinction across the world, it has the got the reputation of ‘Champagne of Teas.’ It constitutes less than 1% of all the tea harvested in the world and commands premium in the international market. It is noteworthy that although 10 million kg of tea is produced every year but 40 million kg of tea is sold as Darjeeling Tea worldwide. Misuse and infringement of “Darjeeling” brand posing huge problem in taking advantage of Darjeeling tea’s brand equity and proper positioning in the international markets. There is a huge economic loss to Darjeeling tea producers and exporters due to blending of inferior varieties of tea. Price Discrimination: There is a vast difference in auction price and retail price of Darjeeling Tea. For instance, the auction price of organic Darjeeling tea is only around US $3-5 per kg while it is sold in retail at $350 per kg in Japan, $100 per kg in the US, $40 per kg in Germany, $200 per kg in UK and $150 per kg in France. Inappropriate Brand Extension: In view of strong Brand equity of Darjeeling, it is not uncommon to find even the non-tea products using the brand name. In Paris the fashionable store Rue du Faubourg in St Antoine uses the brand name Darjeeling for its lingerie section, one may also find Darjeeling greeting at Megasin 74. In Norway, telecom products under the brand name Darjeeling can be obtained. A whole range of services and products such as perfumes, coffee and soft drinks sell under the Darjeeling brand name around the world. Such misuse and infringement of ‘Darjeeling Brand’ name around the world has severe implications on the international marketing of Darjeeling Tea.
  3. 3. Section A, Group 6: Darjeeling Tea: Global Infringement and WTO TRIPS agreement: The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) is an international agreement administered by the World Trade Organization (WTO) that sets down minimum standards for many forms of intellectual property (IP) regulation as applied to nationals of other WTO Members. It was negotiated at the end of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) in 1994. The TRIPS agreement introduced intellectual property law into the international trading system for the first time and remains the most comprehensive international agreement on intellectual property to date. In 2001, developing countries, concerned that developed countries were insisting on an overly narrow reading of TRIPS, initiated a round of talks that resulted in the Doha Declaration. The Doha declaration is a WTO statement that clarifies the scope of TRIPS, stating for example that TRIPS can and should be interpreted in light of the goal "to promote access to medicines for all. A product’s quality, reputation or other characteristics can be determined by where it comes from. Geographical indications are place names (in some countries also words associated with a place) used to identify products that come from these places and have these characteristics (for example, “Champagne”, “Tequila” or “Roquefort”). Protection required under the TRIPS Agreement is defined in two articles. All products are covered by Article 22, which defines a standard level of protection. This says geographical indications have to be protected in order to avoid misleading the public and to prevent unfair competition. Article 23 provides a higher or enhanced level of protection for geographical indications for wines and spirits: subject to a number of exceptions, they have to be protected even if misuse would not cause the public to be misled. Exceptions (Article 24) In some cases, geographical indications do not have to be protected or the protection can be limited. Among the exceptions that the agreement allows are: when a name has become the common (or “generic”) term (for example, “cheddar” now refers to a particular type of cheese not necessarily made in Cheddar, in the UK), and when a term has already been registered as a trademark.
  4. 4. Section A, Group 6: Darjeeling Tea: Global Infringement and WTO Geographical Indicators: A geographical indication (GI) is a name or sign used on certain products which corresponds to a specific geographical location or origin (e.g. a town, region, or country). The use of a GI may act as a certification that the product possesses certain qualities, is made according to traditional methods, or enjoys a certain reputation, due to its geographical origin. The consumer-benefit purpose of the monopoly rights granted to the owner of a GI also applies to the trademark monopoly right. Geographical indications have other similarities with trademarks. For example, they must be registered in order to qualify for protection, and they must meet certain conditions in order to qualify for registration. One of the most important conditions that most governments have required before registering a name as a GI is that the name must not already be in widespread use as the generic name for a similar product. Issues and Infringement:  Less than 1o million kg is being churned out by the 87 gardens in Darjeeling annually. But some 40 million kg of Darjeeling Tea is traded globally every year.  Adulteration and blending have badly hit the coveted high price of genuine Darjeeling Tea.  Earnings of Tea growers decreasing, subsequently planters have resorted to massive use of chemicals, fertilizers and pesticides to jack up yield in order to compensate the plummeting prices.  Legal and registration expenses, costs of hiring an international watch agency and fighting infringements in overseas jurisdictions.  Japan: Unauthorized use and registration of Darjeeling Tea and logo  France: While the Indian system protects French GIs, France on the other hand doesn’t extend similar protection to Indian GIs Key Problems:  Misuse and infringement of “Darjeeling” brand which is posing huge problem in taking advantage of Darjeeling tea’s brand equity and proper positioning in the international markets.  Huge economic loss to Darjeeling tea producers and exporters due to blending of inferior varieties of tea with Darjeeling tea by few countries (Srilanka, Nepal, Kenya…etc.) and are also being sold in international market in the brand name “Darjeeling tea”.
  5. 5. Section A, Group 6: Darjeeling Tea: Global Infringement and WTO Strategy for retaining Darjeeling Brand: 1. Retaining the existing and creating the future markets through a better brand equity strategy and better product positioning (through quality, taste and experience) 2. Selling only to big and trustful international retailers and distributors of Darjeeling tea to get in return a better price realization for the product in that country. 3. Market “Darjeeling tea" as a GI and attracting customer through “TEA TOURISM” 4. Darjeeling tea should only be sold in trusted auction centers particularly of INDIA for minimizing the vast difference between auction price and retail price. Suggestion & Recommendation: a. Govt. of India and tea board of India along with Darjeeling tea planters and marketers should join hand to protect the identity of Darjeeling tea as a real GI belonging to India and should come out with the innovative idea such as “TEA TOURISM” for promotion of genuine Darjeeling tea in international arena. b. Giving the international visitors the experience of Himalayan hills (Darjeeling hills), Culture and tradition of Darjeeling and a mesmerizing and Joyful ride in world heritage toy train of Darjeeling. Q1: Should Darjeeling brand name be used exclusively to the Darjeeling tea growers in India? Yes, it should be used exclusively to the Darjeeling tea growers in India because of the below reasons. 1. Exclusive product owing to Darjeeling’s unique climatic conditions. 2. Prevent Brand Dilution: Tea growers in India produce only 10 million kg but the sale under the brand name is 40 million kg.
  6. 6. Section A, Group 6: Darjeeling Tea: Global Infringement and WTO 3. Adulterated product will bring the perception of the tea down. 4. Inappropriate brand Extension: The brand used for completely unrelated products outside India e.g. Lingerie store is not a compatible brand extension. 5. Benefits not reaching Indian farmers ($5/kg vs. market price of $300). 6. Economic loss to genuine producers and indigenous market. 7. Since 150 years Darjeeling tea has been cultivated, grown & produced in tea gardens geographically located in Darjeeling (West Bengal). 8. “Darjeeling tea” cannot be replicated anywhere else in the world & thus require the unique climatic condition of Darjeeling for growing of Darjeeling tea which is exclusively of India. Premium quality & unique flavor is the special characteristics of Darjeeling tea only. Q2. Should Darjeeling brand name be extended to other product categories, such as garments etc.? Brand extension should be appropriate to leverage the Darjeeling Brand and also to make it relevant, else inappropriate extension will lead to brand dilution. 1. The brand name can be extended, and this can be leveraged for capital gains. 2. Though we must look into two aspects: a. Compatibility of products: The products associated with Darjeeling should be exclusive(sensuous), so a lingerie might work b. Control of the branded clothes must lie with India. 3. It must be undertaken in case to case basis. 4. Also, there is a need for better protection for the brand under TRIPS article 23.
  7. 7. Section A, Group 6: Darjeeling Tea: Global Infringement and WTO Q3. Chalk out a detailed plan with suitable arguments to register ‘Darjeeling’ tea as a geographic indicator. 1. The GI should be based on product exclusive features, place name (or words associated with that place) used to identify that particular product and is found only in that region or place and nowhere else in the world which “Darjeeling tea” does possess. 2. In order to protect the brand equity associated with Darjeeling tea, it is pertinent that it is registered as geographical indicator. 3. As Darjeeling tea refers to the tea grown in Darjeeling region of India, teas grown elsewhere cannot be termed as ‘Darjeeling tea.’ 4. It is in interest of growers of genuine ‘Darjeeling tea’ to get a fair price from international market. 5. Since, the price difference between Darjeeling tea and teas grown elsewhere is significant, it acts as a strong motivating factor to brand teas grown elsewhere as Darjeeling tea. 6. Brand protection and prevention of adulterated tea under the brand. "Ministry of Commerce” and “Tea Board of India” should go forward for registration of “Darjeeling tea” as GI.