34. The representative of Hungary said that, for the purpose of Section 3 of Part II of the TRIPS Agreement, including for the purpose of the work under the Article 23.4 mandate, the notion of "geographical indication" was defined in Article 22.1. His delegation did not believe that any changes would be needed and did not intend to change the definition for the purpose of the register. An attempt to change the definition would clearly fall outside the mandate of Article 23.4. At the heart of the notion of geographical indications, as defined in Article 22.1 of the TRIPS Agreement, was the linkage that had to exist between the quality, reputation and other characteristics of goods, in this case wines and spirits, and their geographical origin. He said that many of the misunderstandings regarding which names fitted the definition under Article 22.1 could be traced back to a failure to keep in mind the importance of this linkage. Because of the necessity to establish this linkage between the quality, reputation and other characteristics and the geographical origin of goods, the question of whether a certain name fitted the definition could only be determined on a case by case basis, taking into account all the relevant specifics of individual situations.
35. Turning to the question of eligibility for inclusion in the register, he referred to the objective of the establishment of the system set out in the mandate. According to Article 23.4, the system was to "facilitate the protection of geographical indications ... eligible for protection in those Members participating in the system". To achieve this objective and genuinely facilitate protection, all those notified geographical indications that did not fit the definition or were not under protection in their country of origin should be filtered out. The objective of establishing the system, namely the facilitation of protection, could not be achieved if notified geographical indications that did not fit the definition or were not under protection in their country of origin were entered into the register. Should there not be a mechanism at the disposal of Members to filter those notified names out, the legal effect of registration could be contrary to the objective of the mandate. This was the reason why the EC and Hungary were advocating the inclusion in the future system of a procedure for opposing the registration of notified geographical indications as an indispensable element. Hungary had tabled two communications in 2000 and 2001 (IP/C/W/234 and IP/C/W/255) suggesting the incorporation of a multilateral element in the opposition or challenge procedure. The EC proposed that, in the case of a disagreement over the registration of a notified geographical indication, the WTO Members concerned - the notifying and the challenging Members - should hold bilateral consultations with a view to settling the disagreement. If those direct bilateral discussions did not yield a mutually acceptable solution, a multilateral possibility should be provided to settle the dispute. That element, in particular, would provide adequate opportunity for smaller WTO Members to represent their interests and would prevent the potential abuse of the opposition procedure by ensuring that it was not left to individual Members to determine whether a challenge was justified or not. Regarding the form of the multilateral procedure, his delegation suggested that the Council explore the possibility of establishing a specific arbitration system. He noted that this form of settling disagreements was not alien to the WTO framework. He referred to Articles 25 and 22.6 of the DSU and Article 8.5 of the Agreement on Subsidies and Countervailing Measures. Nevertheless, his delegation would be open to any other way of settling disagreements that would have the same multilateral character and that would be simple and effective. The effect of the arbitrators' decision in the case of challenges in relation to Articles 22.1 and 24.9 would be of an erga omnes nature. If the arbitrator found that a notified and challenged geographical indication did not fit the definition or was not under protection in its country of origin, it would not be entered into the register. That erga omnes effect was important in particular for two reasons. Firstly, it would save time and effort for the participants in the system since a single successful challenge would prevent the registration of notified names not fitting the definition or not under protection in the country of origin; in respect of names contained in such notifications, there would, therefore, be no legal effects in any WTO Member. Secondly, the unfortunate situation would be avoided where the failure of participants to challenge notifications and the resulting legal effect of registration would lead to commercial losses or costs for Members from which the geographical indications in question originated even if those Members successfully challenged the registration on the basis of Articles 22.1 or 24.9. In addition, Members should have the opportunity to challenge the multilateral registration of notified geographical indications by referring to the exceptions in Article 24.4 (prior and good faith uses), 24.5 (prior application for or registration of a trademark) and 24.6 (generic names). In the case of successful challenges, the notified geographical indication would be registered but with the note that the registration did not have a legal effect on the successful challengers. The reason for not having an erga omnes effect in the case of those challenges was that the applicability of the exceptions in Article 24 could only be determined on a case by case basis. Under the proposal by Canada, Chile, Japan and the United States (IP/C/W/133/Rev.1), the multilateral registration of names not fitting the definition or not under protection in the country of origin could not be stopped and national authorities would be obliged to refer to them in their decisions. It was not entirely clear to Hungary how this could facilitate protection. He would welcome some clarification of that point.