Last year, the EU Court of Justice ruled in an infringement case between the EU Commission and Denmark. The case concerned whether Danish dairies could apply the designation ‘feta’ to cheese exported to markets outside the EU. In 2002, this designation had been registered as a protected designation of origin under the EU’s quality scheme rules. This means that the designation has since been reserved for cheese originating from a specific geographical area in Greece and complying with the product specification applicable to this product under EU law.
The judgment is another chapter in what has been called the ‘feta saga’. This is not the first time that Denmark has been involved in a case before the EU Court of Justice concerning the ‘feta’ designation. In 2002, Denmark, together with Germany, attempted to have the registration of ‘feta’ as a protected designation of origin annulled, but without success.
The EU quality scheme rules are intended, inter alia, to address the fact that consumers are increasingly demanding quality products with specific characteristics and food and agricultural qualities, which are particularly linked to their geographical origin. Producers can only continue to produce quality products if they are fairly rewarded for their efforts. This requires that they can inform consumers about the characteristics of the products and the food and agricultural qualities.
Member States are responsible for taking the necessary measures to prevent or stop the unlawful use of protected designations of origin in their territory. In the infringement case against Denmark, the EU Commission argued that the Danish State had failed to comply with this obligation because it had not prevented or stopped Danish dairies from using the designation ‘feta’ for cheese produced in Denmark and exported to markets outside the EU. In addition, the EU Commission considered that the Danish State had also failed to comply with the EU’s treaty principle of loyal cooperation. The EU Commission was supported during the case by Greece and Cyprus.
It was not disputed that Denmark had failed to prevent or stop Danish dairies from using the designation ‘feta’ for cheese produced in Denmark and exported to markets outside the EU. However, the Danish State considered it unclear whether the EU’s quality scheme rules and thus Denmark’s obligation under these rules even apply to products exported to markets outside the EU.
In response to the EU Commission’s first complaint, the EU Court of Justice held that Denmark had failed to comply with its obligation by failing to prevent or stop Danish dairies from using the designation ‘feta’ on cheese not covered by the protected designation of origin ‘feta’ because it is produced in Denmark.
The EU Court of Justice reached this result by initially noting that it follows from the very wording of the EU quality scheme rules that they prohibit ‘any direct or indirect commercial use of a registered designation for products not covered by the registration, if those products are comparable to the products registered under that designation, or if the use of the designation exploits the reputation of the protected designation’.
The term ‘any use’ indicates that the use of a protected designation of origin to designate products manufactured within the EU but not complying with the product specification for that designation of origin is not covered by the rules, even if they are intended for markets outside the EU.
Furthermore, it appears from the wording that Member States must take ‘the necessary administrative and judicial measures to prevent or stop unlawful use of protected designations of origin and protected geographical indications … in connection with products manufactured or marketed in the Member State concerned’.
The words ‘manufactured or marketed’ indicate that this obligation applies not only to products marketed in the Member State’s own territory, but also to products manufactured in the Member State. This means that the Member State’s obligation to prevent or stop unlawful use of a protected designation of origin applies to all products manufactured within the EU, regardless of whether they are intended for export to markets outside the EU.
Since the EU’s rules must be interpreted not only on the basis of their wording, but also in the light of their context and purpose, the EU Court of Justice further noted that the registration scheme for protected designations of origin is established to ensure uniform protection of designations of origin as an intellectual property right within the EU. In addition, the purpose of the scheme is, inter alia, to ensure that fair competition is taken into account by helping producers of agricultural products and foodstuffs to inform consumers about the characteristics of the products and the food and agricultural qualities. Furthermore, it is to help producers obtain fair remuneration for their efforts. The scheme therefore pursues considerations that apply not only to sales within the EU, but also to exports to markets outside the EU.
On this basis, the EU Court of Justice held that the EU’s quality scheme rules prohibit Danish cheese producers from using the protected designation of origin ‘feta’ as a designation for products manufactured in Denmark and not complying with the product specification for that designation of origin, even if they are intended for export to markets outside the EU. The EU Court of Justice concluded that the Danish State had therefore failed to comply with its obligations by failing to prevent and stop Danish cheese producers from using the designation ‘feta’ for cheese produced in Denmark.
However, the EU Court of Justice acquitted Denmark of the EU Commission’s second complaint concerning a breach of the principle of loyal cooperation, because the complaint concerned the same conduct as the first complaint, namely the Danish State’s failure to prevent and stop Danish cheese producers from using the protected designation of origin ‘feta’. The EU Court of Justice also found that it had not been proven that Denmark had otherwise encouraged the unlawful use of the designation ‘feta’.
With the judgment, the EU Court of Justice has now definitively established that the EU’s quality scheme rules must not only be observed within the EU. They also apply outside the EU’s borders. Companies in the EU must not use designations on their products if the designations are protected by EU rules. This also applies even if they are exported to markets outside the EU. For Danish dairies, this means that they must not use the designation.
Jyllandsposten published lawyer Hans Sønderby Christensen’s article on Thursday, April 20, 2023 on their website. Read it here, or one of our many other articles below:
