I. Identification

1. The Issue

In 1999, South Africa and the European Union signed an agreement to establish a Free Trade Area (FTA) between the EU and South Africa. The Trade and Development Cooperation Agreement (TDCA) provisionally went into effect Jan, 1, 2000. However, negotiations between the two sides have been stalled over the Agreement on Trade in Spirits.The dispute revolves around the labeling of certain products which are protected names in the EU such as Ouzo, Grappa, Korn, Kornbrand, Jagertee and Pachan. Greece and Italy were the two most vociferous proponents of protection of their grape skin and aniseed flavored spirits. Greece threatened to veto the agreement if South African producers did not discontinue the production of their version of ouzo. The efforts of Greece and Italy to protect the names ‘ouzo’ and ‘grappa’ in South Africa seems puerile and ridiculous. Ouzo is not even manufactured in South Africa and less than 30,000 cases of grappa are produced annually.”The Italians and the Greeks say it is a matter of principle. They will not tolerate South African wine producers marketing their own version of two liqueurs which are part of the history of Mediterranean spirit production”. Their protestations threatened to ruin a deal that liberalized 95% of trade between the EU and South Africa worth over USD 17b. The Agreement Spirits was finally signed and provisionally went into effect Jan, 28, 2002. But the EU did not stop there. At the 2003 World Trade Organization meeting in Cancun, the European Union petitioned for the name of ouzo (and 40 other products) to be protected under the Trade Related Aspects of Intellectual Property Rights (TRIPS) act of 1995.

2. Description

A Short History

Ouzo has its roots in Byzantine (eventually Ottoman then Turkish) origin dating back to the 1600’s. Distillation of spirits and wines began in the Arab world. People added sugar to wine residue to produce a drink similar to present day grappa. Eventually the Turks began infusing and processing the residue with aniseed which gave the liquor its distinct Turkish characteristic, the flavor of licorice. The origin of the name ouzo is a bit murky. The drink itself derives its origins from a Turkish drink called raki. Originally the drink was called “Tsipouro” but through a series of contested events, the name was changed t Ouzo. , In 1800’s the Greeks shipped the first cases of their aniseed drink tsipouro to Marseille. They were also exporter of fine cocoons at this time and marked the cases “uso a Marsilla” (Italian for Use in Marseilles ) to distinguish the products. According to legend, a Turkish physician named Anastas Bey was visiting the town of Tyrnavos and asked to try the local tsipouro. After tasting the drink, he exclaimed “This is uso Marsilla, my friends”-referring to the high quality. The name spread by word of mouth until eventually ouzo replaced the name tsipouro. (1)

What is Ouzo?

Ouzo is usually produced from pure white alcohol that has undergone a two distillation process (of course the process varies from distillery to distillery). After the alcohol has been distilled, it is infused with various herbs such as aniseed (most predominant), licorice, mint, wintergreen, fennel, and hazelnut.

Ouzo and the island of Lesvos (Lesbos )

The island of Lesvos is situated close to Turkey in the East Aegean Sea. It is the third largest island in Greece and known for producing the best ouzo in the world. Plomari , which is situated on the southern coast of Lesvos, is considered the ouzo capital of Greece. It is here that one will find many ouzo factories and even a museum dedicated to this strong anise drink.Plomari and Ouzo

Plomari is the second largest city on Lesvos and most ouzo production takes place here. There are several distilleries, large and small, and it is here that the culture of ouzo drinking can be discovered. Eating and drinking is a large part of Greek culture and ouzo consumption verifies it. Many people enjoy ouzo in the atmosphere of a café where it is consumed with mezedes (little snacks), which can include salads, stewed meats and vegetables, cheese, sausages and sweet breads. But the most famous snack to be paired with ouzo is known as Sardeles Pastes. Sardeles Pastes are sardines that have been caught in the morning and served at night. They are usually seasoned with oil and lemon and whatever else the cook desires.

Though most ouzo is produced in Plomari, the ingredients to make ouzo are not. A blight wiped out the wine production several hundred years ago. Though vines are starting to appear again, the production is not enough to sustain the ouzo industry. Lesvos also lacks the climate to produce the herbs and berries used in ouzo production. Most of the ingredients in this typically Greek potable are imported from places outside of Greece like Bulgaria and Romania.

Distillation

Not all ouzo goes through a distillation process. Sometimes, the ingredients are bought, simply mixed together and sold. But the best ouzo is said to be distilled ouzo. Like most spirits, distillation varies from producer to producer. Below is a brief description of how ouzo is distilled by Ouzo Barbayanni, the most famous producer in Plomari (it is also the most potent of the ouzos with an alcohol content of 45%!)

Aniseed The selection of aniseed is of great importance for the creation of good ouzo. When the plant is fully ripe, it is harvested, tied up into small sheaves and dried carefully, in the shade, so that its green color does not fade

The next step “drimonisma””, during which the plant’s seed is carefully separated from the stems. This is done by hand on a tiled plate of marble. The aniseed is then carefully stored in pouches made of plant fibers with all necessary precautions against humidity

Alcohol Alcohol, which constitutes the basis for the production of ouzo, is tested twice. First, when it is delivered and then, right before it is used for the distillation. It consists of 100% pure ethyl alcohol made from raisins.

Distillation The mixture is poured into special alembics (distillation cauldrons) and is distilled three times, with no sudden raises or drops of temperature. From the first distillation, only the “heart”, meaning the middle fraction of distillation, is retained, which is then used for the second and third distillations, which are performed slowly, under constant supervision and testing.

Ripening The “adoloto”, which is the term signifying the middle fraction of the last distillation, constitutes the perfect essence of the procedure’s last stage. It is then stored in large stainless-steel tanks to settle down, accomplishing “bonding” of the recipe ingredients until homogeneity of the mixture is achieved.

Water Before the essence is bottled, it is slowly mixed with crystal-clear water, taken from the mountains of Plomari. This water has excellent characteristics and the proper contents of salts and minerals.

The result The result of this traditional distillation process is a 100% extract which grants uniqueness to Ouzo Barbayanni. (A content of only 20% of extract is required by law). This distillation producing 100% extract is followed to produce all four types of Ouzo Barbayanni, relished today by thousands of admirers of this fine beverage in Europe, America, Australia and New Zealand. (2) How do you drink Ouzo? Many people put it on ice. Others mix it with water which reduces the effects of alcohol and crystallizes the anise oil. Ouzo is meant to be drunk with food, especially when one considers the high alcohol content of some ouzos. There are some who enjoy ouzo in coffee after dinner. There is even a recipe for an ‘Ouzo Frappe‘, but you won’t see it at Starbucks! I personally recommend imbibing several martinis to dull your palate. Once your palate is adequately dulled, you may order a shooter of ouzo with a coke back. Take the shooter, hold your nose and try to swallow it with it touching only the back of your throat. Drink the coke quickly to get any of the residue that may be lurking in the back of your throat. This may not be the traditional way to drink ouzo, but it is an easier way to enjoy it. 3. Related Cases

There are several cases in the Trade and Environment Database (TED) that deal with trademark and intellectual property disputes in or between nations. Many of the cases involve alcoholic beverages (wines and spirits) but several producers of food products, like feta cheese, are slowly seeking protection.

4. Author and Date: Lisa Taylor, April, 2004


II.Legal Clusters

5. Discourse and Status: Dispute SettledThe disagreement between the EU and South Africa was resolved in 2002 with the provisional implementation of the The Agreement on Trade in Spirits beginning Jan, 28, 2002. 6. Forum and Scope: Bilateral and Multilateral The EU and Ouzo The disagreement involved a bilateral agreement between the EU and South Africa. The EU’s inter-union agreement, “Council Regulation No 1576/89“, on geographic indicators, specifically protects the use of the name ouzo. “For an aniseed-flavoured spirit drink to be called ‘ouzo’ it must have been produced by blending alcohols flavored by means of distillation or maceration using aniseed and possibly fennel seed, mastic from a lentiscus indigenous to the island of Chios (Pistacia lentiscus Chia or latifolia) and other aromatic seeds, plants and fruits; the alcohol flavored by distillation must represent at least 20% of the alcoholic strength of ouzo. The distillate must have been produced by distillation in traditional discontinuous copper stills with a capacity of 1000 liters or less. It must have an alcoholic strength of not less than .C1 55% vol and nt more than 80% vol. Ouzo must be colorless and have a sugar content of 50 grams or less per liter” (3)

The WTO and Ouzo

Most recently the European Union brought a list of 41 different products it wanted to be protected under TRIPS. Ouzo was on that list. Currently Ouzo is protected in the European Union, but it is not protected by the WTO. The following explains how TRIPS works and where ouzo would fit in the agreement.

The WTO protects geographic names in the TRIPS agreement (Agreement on Trade-Related Aspects of Intellectual Property Rights). TRIPS is an agreement on intellectual property rights that extends to all members of the WTO of which Greece and South Africa are both members. TRIPS contains two basic standard for geographic protection. They are explained in articles 22 and 23 of TRIPS.

Article 22 of the TRIPS agreement defines geographic indicators as  indications which identify a good as originating in the territory of a Member, or a region or locality in that territory, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographical origin(4). These include names such as Kentucky Bourbon and Scotch and Irish Whiskey and foods such as Parmigian-Reggiano cheese.

Article 23 of TRIPS specifically deals with wines and spirits. Members are allowed to use legal means to prevent the use of protected names on products that do not originate from their protected area. It goes so far to say that products cannot identify themselves as type, style, imitation or the like’. So one could not label a product “Irish style Whiskey”.

The finalized agreement between South Africa and the EU followed many of the precedence set forth in the WTO’s TRIPS agreement.

The US, ouzo and trademark infringement

There have been legal cases in the US regarding trademark disputes over the labeling of ouzo. The Paddington Corporation vs Attiki Importers & Distributors is an example fo this. In 1992, the Paddington Corp sued Attiki Importers because the label Attiki used on its ouzo product #1 Ouzo, they contended, was an infringement on the trademark of their product No. 12 Ouzo.

The labels of the two products were very similar and Paddington Corp believed was used to confuse consumers into believing they were purchasing the more popular of the two products, No. 12 Ouzo when actually purchasing #1 Ouzo.

Unregistered trademarks and trade dresses are protectable under § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), which provides a private cause of action against any person who “in connection with any goods . . . or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof . . . which . . . is likely to cause confusion, or to cause mistake, or to deceive . . . as to the origin, sponsorship, or approval of his or her goods . . . by another person.” 15 U.S.C. § 1125(a).

To prevail in an action for infringement of a trademark or trade dress under Lanham Act § 43(a), a plaintiff must prove (1) that its mark is distinctive and (2) that a likelihood of confusion exists between its product and the defendant’s. Two Pesos , 112 S. Ct. 2753, 2758; Bristol-Myers Squibb Co. v. McNeil-P.P.C., Inc. , 973 F.2d 1033, 1038-39 (2d Cir. 1992). Additionally, functional packaging and product design are unprotected, and functionality may be raised as a defense to an action for trade dress infringement. LeSportsac, Inc. v. K Mart Corp. , 754 F.2d 71, 75-76 (2d Cir. 1985). (5) The court agreed that the labels were similar but that Attiki Importers had not acted in bad faith and merely chose the label amongst 3 different styles that were provided to them by Cavino (the producers of #1 Ouzo). The court justified its findings on the fact that there was clearly a difference between the #’ used on Attiki’s product and the No. used on Paddington’s product. The courts referred to the fact that #11 an #13 ouzo products exist in the market and most generally consumers are aware of the products and are able to distinguish the differences amongst products

7. Decision Breadth: South Africa and the European Union

8. Legal Standing: The Trade and Development Cooperation AgreementIII. Geographic Clusters

9. Geographic Locations Greece and South Africa

Click on Image below to discover more information about

 South Africa and Greece

a. Geographic Domain: Europe

b. Geographic Site: Southern Europe

Below is a brief history of the island of Lesvos (where most ouzo is produced) with an even briefer description of its flora and fauna

History

Archaeologists have discovered the remains of ancient plants and animals that lived over 2 million years ago. Excavations indicate that Lesvos has been inhabited since the Neolithic age. Considering its location, Lesvos has been controlled by several different empires including; the Persians, the Egyptians, the Romans, the Byzantines and the Turks. The island was under attack several times during Turkish rule. In 1912 the island was liberated by a Greek admiral and finally ceded to Greece in 1923. During World War II, the island was occupied by Germany from 1941-1944. Geography, Flora and Fauna

500,000 years ago the volcano Ordomnou erupted and destroyed most of the western side of the island. It is here where one can find a petrified forest. The other parts of the island are mountainous and covered extensively with olive trees. Along with ouzo, Lesvos is renowned for producing some of the best olive oil in Greece. The island is 70km long and 45km wide with an area of 1630 sq km. It has two large bays and home to many marshes and wetlands. Several different types of birds inhabit the island and many come to the island to bird watch.

c. Geographic Impact: Greece

10. Sub-National Factors: No

11. Type of Habitat: Temperate

IV. Trade Clusters

12. Type of Measure: Trademark and Intellectual Property

13. Direct v. Indirect Impacts: Direct

14. Relation of Trade Measure to Environmental Impact None

a. Directly Related to Product:Yes: Arak (aka: arrack and araq)

b. Indirectly Related to Product: Yes

c. Not Related to Product: No

d. Related to Process: Yes: Culture

15. Trade Product Identification: Alcoholic Beverage, more specifically Distilled Alcoholic Beverage.

16. Economic Data

There is little economic data on how much ouzo production effects the Greek economy. Wine is the 8th largest export for South Africa, so it is clear that the reduction of duties on this product will favorably impact wine exporters in South Africa.

17. Impact of Trade Restriction: High

As a part of the EU/South Africa agreement on Wine and Spirits, South Africa is allowed to export 35,300,000 liters of South African wine duty free to the member states of the EU with that amount increasing annually of 6,720,000 liters until 2011. The agreement ensures reciprocal protection of names indicating EU and Member state origin for spirits with a transitional period of 5 years. South Africa also protects the name “South Africa” or similiar names used to describe the country. (6) ( www.fas.usda.gov/gainfiles/200203/135683660.pdf) 18. Industry Sector:Food and Agriculture 19. Exporters and Importers:Greece and Many Table 1 displays the main importers of distilled alcoholic beverages from Greece were as follows

Some resources quoted that Germany consumed 70% of all Ouzo exports while other resources quoted 90%. No concrete data could be found on which resources were correct. It is clear that Germany is the destination for most Ouzo exports. In 1994, the Hellenic Trade Board launched a 3- year program targeting exports of Ouzo to Germany. This explains the large percentage of the total of distilled alcoholic beverages that are exported to Greece from Germany.

Exporters

EPOM (Distillers Union of Mytilene)- this group exports Ouzo MINI, Ouzo FIMI and Ouzo LESVOS. It is a subsidiary of the Groupe Pernod Richard which is actually a French company. This is the company that owns and distributes Chivas, Glenlivet and Wild Turkey. They export 50.7m cases of spirits a year of which 18% are anisse based spirits.

Barbayannis, LTD – a small but famous producer on Lesvos. They export to several countries including; USA, EU, S. Africa, Australia, Cyprus and Canada. They export BARBAYANNIS OUZO BLUE, EVZON, GREEN, APHRODITE OUZO brands.

Metaxa, S&E, A.B.E – this is one of the largest producers and exporters of wine in Greece. They also sell the number one selling brand of Ouzo in the United States, Metaxa Ouzo.

Groupe Campari – The owner of the Ouzo 12 brand which was originally owned by the ouzo maker Kaloyannis. In 1989 the Ouzo 12 brand was sold to GrandMetropolitan, a large UK food and beverage distributer along with the famous brandy Metaxa (who previously owned Metaxa brandy). Kaloyannis still produces Ouzo but is now a subsidiary of Groupe Campari, an Italian company. Campari owns and distributes familiar brands such as SKKY vodka and Cizano Sparking Wines.

Cavino SA – the produce #1 Ouzo which is sold in the United States primarily.

CH Pavlides Bros SA – producers of Ouzo, brandy, vodka and flavored liquors, their market is predominately Europe and Eastern Europe.

Evangelos Tstalis, SA- fairly large producer and exporter of Greek wines, they also produce and sell �fine’ ouzo for export.

Pilavas Distillery SA- produces Pilavas ouzo which is sold in Germany, Belgium, The Former Yugoslav Republic of Macedonia, Italy, Bulgaria and Cyprus

V. Environment Clusters

20. Environmental Problem Type: Culture

21. Name, Type, and Diversity of Species

Name:

Type:

Diversity:22. Resource Impact and Effect: Low and Regulatory

23. Urgency and Lifetime: Low and Hundreds of years

24. Substitutes:There are always synthetic substitutes for the flavors that are infused in ouzo

VI. Other Factors

25. Culture:

Middle Eastern culture is known to have invented the distillation process. Raki and ouzo can both trace their roots to the Arabic drink called “Arrack” (araq and arak). It may seem strange that a culture whose religion prohibits the imbibing of alcohol invented the process which created it. Wine drinking was prevalent in Arabic culture long before Islam came into practice. Alcohol distillation began somewhere around the 8th century AD.

There is no ‘ouzo’ region in Greece so it seems strange that the Greeks are trying to protect a product that has its roots in the Arabic world. The Greeks view ouzo as a symbol of Greece, but is it really? There are several anise infused alcoholic beverages in other countries, such as Sambuca (Italy) and Mastika (Bulgaria). Why aren’t these countries jumping to protect the names of these products?26. Trans-Boundary Issues: There are no trade restrictions on ouzo 27. Rights: 28. Relevant Literature