The Socio-Economics of Geographical Indications

Like trademarks and brands, indications of geographical origin (GIs) play an important role in signalling a certain level of quality. The collective reputation embodied in the indication requires protection from misappropriation and dilution. Protection of indications generates incentives for investments in maintaining a level of quality that consumers have come to expect. Further, misappropriation, while harming the reputation of the indication, leads to consumer confusion and increases search costs. This economic rationale for protecting GIs is evident in Judge Gault’s 1991 decision in favour of Champagne producers: “Champagne is a geographical name. [...] goodwill will be damaged if someone else uses the name in relation to a product in such a manner as to deceive purchasers into believing the product has the characteristics of products normally associated with the name when it does not.” 2