Beer War about BUD finally ended

This war concerns the use of the sign BUD and was fought between the famous brewery in České Budějovice distributing its in Austria famous “Budweiser Bier” and an Austrian importer of “American Bud” and “BUD light” of Anheuser-Busch. The case had been with different legal questions twice before the Court of Justice of the European Union (CJEU) and three times before the Austrian Supreme Court (OGH).

The Austrian specific basis of the (lastly remaining) case was the bilateral Agreement of 11 June 1976 on Geographical Indications and Denominations of Origin between the CSSR and Austria concluded well before any of the parties acceded to the European Union. This Agreement protected BUD for beer absolutely. Any use of the sign BUD in whatever form was forbidden for anyone not being Czech. In the Czech Republic the term BUD is protected as denomination of origin through pertinent registration.

The lastly remaining legal question was what influence does the accession of both countries to the EU have, especially considering the EU Regulation no. 2081/92 of 14 July 1992 (now 510/2006 of 20 March 2006) on the Protection of Geographical Indications and Denominations of Origin. This Regulation offers protection to such terms when they are registered, which necessitates the fulfilment of certain conditions. The Czech brewery in Budějovice did not register BUD under this EU regime upon accession of the Czech Republic to the EU.

In its first decision of 18 November 2003 “BUD I” the CJEU in C-216/01, when the Czech Republic still was not a Member State, stated that a Member State can have a bilateral agreement for simple and indirect geographical indications with a country outside the EU. The OGH then decided following the decision of the CJEU in “BUD I” that for BUD being protected in Austria under the Agreement, it has to be proven that BUD for beer is known by the Czech consumers as referring to a specific locality or region.

Now since the accession of the Czech Republic to the EU in 2004, we have the problem whether two Member States can protect signs by a bilateral agreement on denominations of origin in view of Community Law (Regulation 510/2006). The OGH referred that question again to the CJEU which stated in its second decision “BUD II” (C-478/07) of 8 September 2009 that Regulation 510/2006 has a final character. Therefore, the Regulation hinders the application of a bilateral agreement between two Member States which grants protection to terms falling under the Regulation of one Member State in the other if this term is not registered according to the Regulation.

The OGH concludes from the interpretation given by the CJEU that simple and indirect geographical indications can still be protected by bilateral agreements between Member States. These are terms which indicate origin from a certain locality or region without a direct connection between the quality and other properties of the product and its specific geographical origin. Those are not covered by the Regulation. If, however, such a link exists, it is a geographical indication or denomination of origin protected by the Regulation 510/2006.

Therefore, a term can only be either one protectable by the Regulation or one that is not. In the latter case, protection can be afforded by a bilateral agreement. A parallel protection of the same term is excluded. Since the term BUD is registered and acknowledged as denomination of origin in the Czech Republic and not being applied for under the Regulation, the same term cannot be regarded at the same time as a simple geographical indication in the Czech Republic, which can be protected by the bilateral Agreement. For lack of protection in Austria the request for an injunction against the use of BUD for beer in Austria had to be finally refused.

DI Helmut Sonn